The Relationship Between

Organizational Ethics and Job Satisfaction:

A Study of Managers in Malaysia

Kalavani A/P Daveninderak

Bachelor of Accounting,

Multimedia University

Cyberjaya, Selangor

Malaysia

2003

Submitted to the Graduate School of Business

Faculty of Business and Accountancy

University of Malaya, in partial fulfillment

of the requirements for the

Degree of Master of Business Administration

May 2009

TABLE OF CONTENTS

ABSTRACT...............................................................................................................................i

ACKNOWLEDGEMENT ......................................................................................................ii

CHAPTER 1: INTRODUCTION...........................................................................................1

Chapter Introduction...............................................................................................................1

1.1 Background of the Study.............................................................................................1

1.2 Objectives of the Study................................................................................................7

1.3 Research Questions......................................................................................................8

1.4 Scope of the Study........................................................................................................8

1.5 Significance of the Study .............................................................................................9

1.6 Limitation of the Study..............................................................................................10

1.7 Organization of the Study .........................................................................................11

Chapter Summary .................................................................................................................13

CHAPTER 2: LITERATURE REVIEW ............................................................................13

Chapter Introduction.............................................................................................................13

2.1 Top management support for ethical behavior......................................................13

2.2 The ethical climate in the organization...................................................................18

2.3 The association between ethical behavior and career success ..............................22

2.4 Moral awareness .......................................................................................................25

2.5 Job satisfaction..........................................................................................................29

2.6 Organizational Ethics and Job Satisfaction ...........................................................29

2.7 Prior Literatures on the Relationship between Organizational Ethics and

Job Satisfaction ...............................................................................................................32

Chapter Summary .................................................................................................................34

CHAPTER 3: RESEARCH METHODOLOGY ................................................................35

Chapter Introduction.............................................................................................................35

3.1 Development of Hypotheses .....................................................................................35

3.2 Research Design ........................................................................................................36

3.3 Sampling Technique .................................................................................................37

3.4 Data Collection Procedure .......................................................................................38

3.5 Research Intruments ................................................................................................38

3.6 Data Analysis Techniques ........................................................................................43

Chapter Summary .................................................................................................................44

CHAPTER 4: RESEARCH RESULTS ...............................................................................45

Chapter Introduction.............................................................................................................45

4.1 Summary Statistics ...................................................................................................45

4.2 Analysis of Measures ................................................................................................45

4.3 Testing of Hypotheses...............................................................................................51

4.4 Summary of Research Results .................................................................................55

Chapter Summary .................................................................................................................55

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS........................................56

Chapter Introduction.............................................................................................................56

5.1 Implications of Findings ............................................................................................56

5.2 Conclusions of the Study ...........................................................................................62

5.3 Recommendation for Future Research....................................................................65

Chapter Summary .................................................................................................................66

REFERENCES.......................................................................................................................67

Appendix 1 - Questionnaire ..................................................................................................76

LIST OF TABLES

Table 3.1 : Job Satisfation Dimensions and its items........................................................ 40

Table 3.2 : Organizational Ethics Dimensions and its items.............................................41

Table 4.1 : Demographics Characteristics of Respondents...............................................48

Table 4.2 : Descriptive Statistics and Alpha Coefficient of Variables .............................48

Table 4.3 : Correlation of matrix of variables....................................................................50

Table 4.4 : Results of multiple regression analysis ............................................................54

Table 4.5 : Hypotheses Testing Result ................................................................................55

Table 5.1 : Summary of Research Results ..........................................................................61

Table 5.2 : Summary of Findings of the Research Questions ...........................................65

LIST OF FIGURES

Figure 2.1 : Research Framework.......................................................................................34

ABSTRACT

This empirical study investigates the association between four measures of

organizational ethics (namely, top management support for ethical behavior, ethical

climate in the organization, the association between ethical behavior and career

success, and moral awareness) with job satisfaction. The results obtained from 123

managers in Malaysia confirmed that two measures of organizational ethics showed

significant relationship with job satisfaction. The link between organizational ethics

and job satisfaction is argued from Koh and Boo’s (2001) organizational justice and

cognitive dissonance theories. These findings imply that organizational leaders can

favorably influence organizational outcomes by engaging in, supporting and

rewarding ethical behavior. Another existing study by VanSandt, Shepard and Zappe

(2006) had shown that there is connection between organization’s ethical climate and

moral awareness. Results of the study provide evidence that ethical work climate is a

primary predictor of individual moral awareness. In order to fill a gap in the existing

literature and to make this study more interesting, a theoretical connection between an

individual cognitive element of moral behavior (moral awareness) and job satisfaction

is studied.

ACKNOWLEDGEMENT

First, I would like thank my supervisor, Mr.Zulkifly Ramly, for his kind supervision,

support, constructive criticisms and guidance that helped the completion of this

project paper.

Next, I would like to express my gratitude and heartfelt thanks to my sister, Sham,

who is lecturing at Segi College, Subang Jaya, for the time she took to read and make

appropriate changes where necessary. I would also like to thank her Head of

Department, Dr. Sheela Abraham, who supplied me with all relevant journals and

project papers which were used as reference and guidance.

My deepest appreciation goes out to my respondents for taking their precious time to

answer the questionnaire. Their information was vital for this project.

To my family and friends, thank you so much for your financial support, contributions

and sacrifices throughout the course of my study. May god bless you.

1

CHAPTER 1: INTRODUCTION

Chapter Introduction:

This chapter introduces the background of the study covering definition of

organizational ethics and job satisfaction, the importance of business ethics and the

impact of overlooking ethical aspects in business. Some of the actual companies that

are involved in the ethical misconduct scandals are also included in this chapter for

better understanding. Besides, this chapter states the problem and objective of the

study; thereafter it presents a general scope and significance of the study. The

research methods adopted and limitations are also included here. This chapter also

details out the overall structure and the flow of this report.

1.1 Background of the Study

Organization needs ethics quality not only to prevent unhealthy behavior but

also to inspire superior reasoning and performance. It is only through human nature

and ethics- the reasoning science, that organizations can inspire greater levels of

innovation, teamwork, and process breakthroughs that results in sustainable

competitive advantages.

Until recently, only few organizations seriously considered ethics to be a

legitimate topic for enterprise planning and strategic thinking (Koh and Boo, 2001;

Keith, Pettijohn and Burnett, 2003; Wight, 2003; Cruz, 2004) Those at the top of an

enterprise regularly spent time developing their organizational and functional strategic

plans, their growth strategy, possibly even their brand strategy, but ethics and

2

regulatory compliance was merely an issue for the finance department, legal counsel,

and possibly human resources.

Today we are painfully aware that, ethics in organizations are becoming

increasingly more complex, involving issues such as societal expectations, fair

competition, legal protection and rights, and social responsibilities (Koh and Boo,

2001). They also have potential consequences on more and more parties, including

customers, employees, competitors and the general public (Vitell and Davis, 1990).

Let’s rewind to the beginning of this new millennium when top companies like

Enron, WorldCom, Arthur Anderson and even a well-known household name- Martha

Stewart were in the lime light for their misconduct. As shocking as it maybe, people

became more cautious and aware of the widespread organizational misbehavior and

criminal activity that’s happening around them. As a result, political leaders have

urged for the creation of a formal ethics strategy to be a high priority for all

enterprises, irrespective of their size or structure (Peppas, 2003; Jaramillo, Mulki, and

Solomon, 2006; Bart, 2006; Mulki, Jaramillo and Locander, 2008; Stanley, 2008;

Premeaux, 2009). Economy leaders began stressing that in business, the trustworthy

conduct of many professions improves the efficiency of industries and the economy as

a whole. For example, when accountants fabricate a company's books, and the stock

price balloons, the bubble must eventually pop, and that innocent third parties will

bear the consequences. Aside from the unfairness, that situation discourages capital

flow to promising ventures later because of investors' mistrust. (Wight, 2003).

Mulki et. al. (2008) stated that there are three major impacts when companies

are found to be unethical. First, consumers tend to shy away from products and

services from organizations with unethical reputations. This affects current and future

business thus hurting the value of the firm. Second, some unethical practices are also

3

illegal or fraudulent, consequently increasing the firm’s liability, financial risk, and

costs. Third, unethical climate has a pervasive effect on employees via high levels of

workplace stress, lower job satisfaction, low performance, and eventually turnover.

Even movies based on true story such as Wall Street and Erin Brockovich became a

huge hit, highlighting the consequences of ethical misconduct in businesses.

Learning from Enron’s mistake, many large organizations have established a

position for an ethics officer [also referred to as the Chief Ethics and Compliance

Officer (CECO)] while smaller organizations turn to consultants that specialize in

ethical consultation. Some of the issues and responsibility of Chief Ethics and

Compliance Officer (CECO) are first, they should be held accountable to the

governing authority while carrying out his or her delegated fiduciary responsibilities.

Second, the CECO should be independent to raise matters of concern without fear of

reprisal or a conflict of interest. Next, the CECO should be connected to company

operations in order to build an ethical culture that advances the overall objectives of

the business. Finally, the CECO should be provided with authority to have decisions

and recommendations taken seriously at all levels of the organization. These four

principles were discussed in depth in the study by Kavanagh (2008).

Meanwhile, looking at international arena, the increasingly globalization of

business has brought about a greater need to deal with ethical questions in new and

different settings (Viswesvaran, Deshpande and Joseph, 1998). These developments

have increased both the depth and breadth of business ethics research today.

According to a publication by PR Newswire (2006), many Americans place a higher

value on a corporation's ethical reputation than on its financial performance or the

costs of its products, the study found. In fact, only 15 percent out of 2000 survey

respondents (consist of U.S. adults) said they would purchase stock in a company that

4

had performed well financially but made bad ethical decisions. Half of respondents

who owned stock in some organizations had already at some point decided not to

purchase stock in a company because they knew of questionable ethical actions by the

company's management or employees.

The study of business ethics typically involves inquiry into the nature and

grounds of moral judgments and can be defined as the discipline relating to right and

wrong, moral duty, principles and values in handling ethical issues within an

organization (Vitell and Davis, 1990; Beck, 2002; VanSandt et al., 2006). Koh and

Boo (2001) believe that there are strong needs to study the organizational outcomes of

business ethics because it influences. At a corporate level, a firm’s ethical behavior

can reflect its performance and culture. On the individual level, consequences such as

job satisfaction, stress, motivation, commitment or job performance can have

significant impact on organizations.

To date, many empirical studies have been conducted to investigate the

determinants of ethical behavior in organizations. This includes determinants such as

leadership (Mulki, Jaramillo and Locander, 2008; Stanley, 2008), Human Resource’s

role (Bart, 2006), code of ethics (Jaramillo, Mulki and Solomon, 2007), peer pressure

(Keith, Pettijohn and Burnett, 2003), personal attributes and emotions (Bratton, 2004),

moral development (Ambrose, Arnaud and Schminke, 2006) and others. According to

Bart (2006), human resource personnel play an important role in the implementation

of ethical code and reward system for ethical behavior in organization. It is through

the proper hiring, training and development arranged by the human resource

department that employees can be educated on ethical issues. Keith et. al. (2003)

stated that peer’s behavior in an organization highly influence the way an ethical

5

decision is made by an employee. This is because, co-worker serves as the closes

point of referral should an employee face any dilemma in terms of ethics. Peer ethical

behavior exerts a strong influence on the comfort or discomfort level and the ethical

behavioral intentions of employees. Further, the strong influence exerted by peers

seems to transcend the ethical behavior of the manager and carry over to the attitude

toward the entire corporate environment.Employees tend to be influenced by the way

their co-worker behaves in their workplace. Investigating these types of determinants

of ethical behavior is important as it increases understanding of the factors associated

with business ethics and ethical decision-making.

Previous study by Honeycutt, Siquaw and Hunt (1995) however observed that

very few studies have examined ethics across cultures. Culture can be defined as the

collective programming of the mind that distinguishes the members of one category of

people from those of another (Hofstede and Bond, 1988). What may be considered

not ethical in one country may be customary or even acceptable in others (Karande,

Rao and Singhapakdi, 2000). Singhapakdi, Rawwas, Marta and Ahmed (1999) did a

cross cultural study of marketing ethics using the work of Hofstede (1988). It suggests

that national cultures can be classified along four primary dimensions which are

power distance, individualism, uncertainty avoidance and masculinity. Power distance

addresses the degree to which a society's weaker members accept injustices in how

power is exercised. While injustices arise in every society, different cultures accept

varying levels of inequity. Members of cultures characterized by a highpower distance

(e.g. India) are expected to obey a superior's orders with no questions asked.

Individuals socialized in such cultures tend to use formal standards and ideals for

guidance on appropriate behavior in consumption situations having ethical content

(Vitell et al., 1993). Individuals nurtured in cultures that have low power distance (e.g.

6

the USA) do not always agree to their superiors. Respect generally must be earned in

these cultures. Individuals in low-power distance societies generally turn to their

colleagues or peer group for guidance. Individualism addresses the extent to which

members of a culture are concerned mainly with their own interests and family's

welfare. Collectivist cultures (e.g. Malaysia) view individuals as part of a larger group,

such as an extended family or tribe. The group protects its members' interests and they,

in return, are expected to show loyalty to and concern for the group as a whole.

Members of individualistic cultures (e.g. the USA) frequently question the ethical

norms and standards established by their societies. By contrast, members of

collectivist cultures are inclined to accept them (Vitell, et al., 1993). Malaysia and the

USA are quite far apart on two of these dimensions, power distance and

individualism; therefore, the present study in Malaysia is expected to differ from the

previous studies done in Western countries (Koh and Boo, 2001). .

Growing numbers of firms are expecting more of their profits to be derived

from international sales. To a large extent, such international growth is needed in

today's world, given the ever-increasing globalization of economies. Singhapakdi et.

al. (1999) explains that moving into foreign markets does not guarantee larger profits;

it may, in fact, guarantee more headaches for managers, because different cultures

employ varied methods of communication. For example, acts such as compact disk

piracy or brand counterfeiting are illegal and likely to be considered unethical by

people in most Western countries. These same activities, however, are quite common

business practices in many East Asian nations (Singhapakdi et. al., 1999). In an

empirical study, Burns and Brady (1996) consistently found genuine differences in

ethical perceptions of business students in Malaysia compared to their counterparts in

the USA. As Asian countries are gradually opening their doors to foreign trade and

7

investment, there is correspondingly increasing research interest in organizational

ethics in the region (Koh and Boo, 2001).

1.2 Objectives of the Study

Very little empirical research has been done into business ethical issues in

Asian countries like Malaysia. Most research into business ethics has been carried out

as a way of explaining this phenomenon in (advanced) Western countries (Koh and

Boo, 2001). Yet, given the cultural differences that lead to differences in ethical

attitudes any such research findings would not necessarily apply to the, likely, unique

Malaysian case model.

With the above general problem in mind, the purpose of this research is to

examine the relationship between organizational ethics (consisting of top management

support for ethical behavior, ethical climate in the organization, the association

between ethical behavior and career success and moral awareness) and job

satisfaction among Managers in Malaysia. Moreover, job satisfaction relates to

employee motivation, performance, absenteeism and turnover (Bullen and Flamholtz,

1985) and it is an important organizational construct. Thus, it is useful to investigate

whether corporate leaders can generate favorable organization outcomes through its

role in business ethics.

8

1.3 Research Questions

This Study addresses the following research questions:

(1) Does ethical climate affect the employee’s job satisfaction in organizations in

Malaysia?

(2) Does top management’s support influence the ethical behavior of it’s

employees?

(3) Does an employee with ethical behavior are more likely to be successful in

his/her career?

(4) How does employee’s moral awareness influence his/her job satisfaction?

1.4 Scope of the Study

Scope of this study is to examine the relationship between four dimensions of

organizational ethics (top management support for ethical behavior, ethical climate,

association between ethical behavior and career success, and moral awareness) and

six facets of job satisfaction (pay, promotion, co-workers, supervision, work and

overall job satisfaction) among managers in Malaysia

The primary data used in this study is secured through survey questionnaire.

Cross-sectional data of respondents from various industries is subjected to

quantitative analysis to test the relationship.

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1.5 Significance of the Study

The study is significant in the following ways. First, organizational ethics and

job satisfaction have been studied in the light of western organizations in the past

studies. But in this study, the focus is on Malaysian organization. And also, additional

element of moral awareness is included to test it’s relationship with job satisfaction.

The new element of study multiplies the complexities from the earlier study.

Second, the study serves to break the traditional expectations of Malaysian

society that imposes top management to focus mainly on aspects such as fair

treatment, rewards and recognition and promotion when it comes to employees to job

satisfaction. Thus, this study would add in a modest way to the knowledge of job

satisfaction and employee retention in Malaysia.

Third, this paper also looks at ways on how top management can incorporate

ethics in everyday business and encourage employees to take their leaders as a role

model to behave ethically in this society.

Thus, the findings from this study are meant to be useful in assisting

management to meet the needs of competitive Malaysian and global businesses.

Organizational ethics will help to minimize the negative impacts and maximize

positive effects by portraying a good rapport and corporate image for the

organization. Thus, the quality of Malaysian employees in terms of ethical value and

work performance would ultimately improve.

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1.6 Limitation of the Study

In interpreting the findings of the study, there are some limitations that must

be considered in future investigation. Firstly, a major limitation of this study is the

small sample size. The MBA students may not be representative of the population of

managers in Malaysia. Further, the findings may not be applicable to a different

population (e.g; general workers) or geographical region. As a result, the power of the

test is generally weaker.

Secondly, limitation of a self-report research questionnaire and survey applies

(i.e. non-response bias and response bias). Non-response bias may come about when

sampled subjects who are significantly different from the respondents do not respond.

However, this may not be a serious problem in the study because the response rate of

62% may be considered acceptable for a survey. Further, test results detect no

indication of non-response bias. Response bias may be introduced when a

respondent’s responses are biased by the background characteristics of the respondent

or the study. This, however, is mitigated by the anonymity of the respondents and

promised confidentiality of the responses.

Thirdly due to time and resources constraint, data were collected at a single

point in time, which does not allow for changes in perceptions and attitudes over time.

Fourthly, some of the feedback from respondents is that the questionnaire did

not provide ‘in between answers’ such as somewhat agree or somewhat disagree. It is

proposed that future research questionnaire should take this into account. Finally, the

measure of job satisfaction comprises only a small number of items, which tapped

11

different aspects of job satisfaction behavior, and does not represent an overall view

of job satisfaction; therefore this is a considerable biased view of this study.

1.7 Organization of the Study

The presentation of this research is organized into five chapters. The first

chapter presents introduction, background and objectives of the study, the research

questions, scope, significance, the limitations and organization of the study.

The second chapter provides a review of some literature on organizational

ethics (top management support for ethical behavior, ethical climate, association

between ethical behavior and career success and moral awareness) and job

satisfaction (pay, promotion, co-workers, supervision, work and overall job

satisfaction) and the relationship among these variables.

The third chapter, on research methodology, describes the hypotheses to be

tested and deals with the methods for this study with elaboration on sampling

procedures, the research instruments and data analysis procedures.

The fourth chapter, research results, describes the sample’s characteristics,

examines the reliability and validity of scales, and finally explains and analyses the

research results in relation to hypotheses tested.

The fifth chapter summaries the major findings of the study and discuss

possible managerial implication of the research results. It also suggests ideas for

further research in this area.

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Chapter Summary:

This Introduction chapter outlined the background of the studies, the

objectives, scope, significance, limitations and organization of the study. In the

following chapter, the literatures done by previous researchers in the subject of

organizational ethics and job satisfaction are examined for it’s relationship.

Conceptual Framework is also developed for clearer understanding.

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CHAPTER 2: LITERATURE REVIEW

Chapter Introduction:

In this chapter, a review of literature on the each individual variables were

studied thoroughly starting with the independent variables (top management support

for ethical behavior, ethical climate in the organization, association between ethical

behavior and career success, and moral awareness) and followed by the dependant

variable (job satisfaction). This chapter highlights important finding from previous

researchers, and gives a clearer understanding on the variables researched through

conceptual framework. This chapter also outlines the similar and contradicting

literature from past studies.

2.1 Top management support for ethical behavior

According to Wells and Spinks (1996), most companies that wish to improve

their ethical behaviors develop codes of ethics for their organizations. The code

defines the behaviors that are considered ethical as well as unethical, and it provides a

set of written guidelines for each employee to follow. While such a code can, to a

certain extent stimulate ethical behavior among managers, it alone may not be

sufficient. Jack Welch, the CEO of General Electrics in U.S. believed that “an

organization is only as strong as it’s top talent”. Wotruba (1990) also found that

superiors have a strong impact on the ethics of their subordinates. The organization’s

upper-level management themselves must demonstrate ethicality in their everyday

behavior. The attitude of upper-level management towards the company’s code of

ethics sets the tone for the attitudes of lower level employees. Thus, without

commitment from top management, it’s rather difficult for employees to communicate

14

and discuss openly on any problem pertaining ethics. If ethics are to pervade all

aspects of corporate strategy, individuals must feel able to express their ethical views

without fear of retribution (Brigley, 1995). Organizations should create a non-

threatening environment for the discussion of ethical problems; there is a need for this

to encompass a participative process which is seen to include and to value the views

of the widest range of interest groups.

In a study conducted at University of Bath, UK by Brigley (1995), 96% out

of the 712 managers surveyed agreed that as managers, they are responsible in giving

ethical leadership for their employees. When upper-level managers say they support

the code but act differently, lower-level employees will assume that the code is not a

serious document. On the other hand, if upper-level managers say they support the

code and their actions show that support, then lower-level employees will take the

code seriously and support it. In an attempt to find variables that influence the

effectiveness of code of ethics, Boo and Koh 2001 gathered that strong top

management support indeed resulted in higher level of ethical behavior.

It’s no secret that if bosses act in certain ways, employees will follow their

leads (Herb, 1987). According to Trevino (1986), in organizations where legitimate

authority is an accepted tenet of the work setting, employees are expected to carry out

the orders of top management, even if those orders are contrary to their determination

of what is right. The two situations mentioned above are consistent with the cognitive

dissonance theory where individuals strive to minimize dissonance in their

environment. In addition to trying to reduce the dissonance, people will actively avoid

situations and information which would be likely to increase the dissonance

(Festinger, 1942). Furthermore, Morieux and Sutherland (1988) also described the

cultural values and methods of operation of new managers that clash with the existing

15

culture in organizations can lead to conflict, the challenging of existing norms and

certainties and the undermining of the authority of managers. Koh and Boo (2001)

mentioned that such a conflict or dissonance could be a considerable source of stress

leading to lower job satisfaction.

On the other hand, from the perspective of justice theory, top management that

supports ethical behavior is perceived to be fair to employees. This will result in

higher level of employee job satisfaction. When individuals see themselves as treated

fairly, they are also more likely to accept the changes presented to them (Cordery,

Sevastos, Mueller and Parker, 1993; Kirkman, Shapiro, Novelli and Brett, 1996;

Konovsky and Cropanzano, 1991). Spector (1988) also proposed the internal work

locus of control which refers to an individual’s belief that outcomes at work such as

promotions or salary increases are controlled either by one’s own actions and thus it is

positively correlated with job satisfaction, commitment, influence at work, and leader

consideration. However, Greenberg (2001) notes that the perception of justice may

differ from one person to another and from one culture to another. For example,

individuals who perceive their contributions and opinions to be valued by others will

be more likely to believe that decisions made by the group are fair because they

perceive themselves as a valued member of the group.

To support an ethical work environment, firstly top management should not

place the executives under undue pressure to achieve goals that are not possible

without practicing unethical behaviors (Wells and Spinks, 1996). Most unethical

behaviors engaged in by business executives are the results of attempts to accomplish

goals that they feel pressured to accomplish and that they feel cannot be accomplished

within the bounds of ethical behavior. When an executive’s job is on the line, the

temptation to salvage it by any means possible may be acceptable to that executive.

16

For example, a study by Ponnu, Said and Apnizan (2008) on the ethical orientation of

Malaysian middle managers found that corporate gift practice is not acceptable by

many middle managers in Malaysia because it evokes the question of bribery and

ethicality. However, they still pursue to use corporate gifts, in the majority cases

because it’s required by the top management. In this example, among difficult

management issues is the ethical tension between the bottom line and the public

interest. It is the question of whether harm caused to the community as a whole by

redundancies ethically less important than increasing economy and efficiency in one’s

business (Brigley, 1999).

Vitell and Singhapakdi (2008) suggest that organizations should pay close

attention to top management commitments and ethical leadership. According to

Brigley (1997), organization can instill ethical values among its employees through

appropriate leadership training for them to understand or value the importance of

ethics to the success of the organization. To raise awareness, ethical issues should be

seen to matter and to be openly discussed when ethical discomforts arise at all levels

of the organization, from the most senior downwards. Management training should

include consideration of relevant and practical situations involving ethical decision

making. The involvement of managers from different backgrounds can be helpful in

challenging hidden assumptions (Brigley, 1997). Vitell and Singhapakdi further added

that if top management wants its employees to have greater job satisfaction, greater

organizational commitment, and greater esprit de corps, it is important to

communicate to them, on a regular basis, the values and norms as well as the rules

and guidelines of the organization. If a firm’s employees perceive that their employers

are ethical, then that firm may discover that job satisfaction ratings are high and that

turnover intentions are low (Pettijohn C., Pettijohn L. and Taylor A.J; 2007).

17

While many authors found that there is a strong need in top management’s

support for ethical behavior which eventually leads to job satisfaction e.g.; Vitell and

Davis (1990b), the study by Viswesvaran C., Deshpande S.P, Joseph J. (1998) on

Indian managers, however, found that the correlation were not so significant. Koh and

Boo (2001) speculated that the cultural differences among Indian managers as

compared to previous studies that focused on American managers might have been

attributed to this result. It was possible that the Indian managers were accepting the

ethical decisions (regardless of it being right or wrong) from top management more

passively than other managers were.

However, Koh and Boo (2001) found that there is a significant relationship

between top management support for ethical behavior and job satisfaction among

managers in Singapore. Although Singapore is a part of Asia just like India, the

results seems be slightly different. This shows that managers from different national

cultures have different assumptions as to the nature of management and organization

(Vance, McClaine, Boje, and Stage,1992). It is also noted that most research into

business ethics has been carried out mostly in (advanced) Western countries (Koh and

Boo, 2001). Given the cultural differences that lead to differences in ethical attitudes

(Sims, 2006) any such research findings would not necessarily apply to the, likely,

unique Asian case model (Kim and Miller, 2007) . Therefore, it is not known whether

the results in the Western and Singapore context would similarly be observed here in

Malaysia. Thus, a null hypothesis is proposed to test whether top management support

for ethical behavior has any impact on the job satisfaction of Malaysia managers:

H1: Top management support for ethical behavior has no significant effect on job

satisfaction.

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2.2 The ethical climate in the organization

Organizational climates are the psychological environments in which behavior

of individuals occur (Ott, 1998). Organizational ethical climate is defined as an

employee’s general perceptions of organizational signals regarding norms in making

decisions which have a moral component e.g. how to behave ethically and how ethical

issues should be handled (Cohen,1993; Victor and Cullen ,1987 ).Victor and Cullen

(1988) discuss climate as (1) an aggregate perceptions or organizational conventions

concerning forms of structure and procedures for rewards and control (perceptions of

practices and procedures – Schneider, 1975); and (2) aggregate perceptions of

organizational norms concerning warmth towards and support for peers and

subordinates (organizational values – Denison, 1996). O’Keefe (unknown year)

described that ethical climate is conceptualized as general and pervasive

characteristics organizations, affecting a broad range of decision that act as the basis

on which people decide if a decision is right or wrong.

Victor and Cullen (1987, 1988) developed the ethical climate matrix that

consist of three bases of moral judgment and nine ethical criteria that is expected to

guide firms decision making process. They are Egoism, Benevolence and Principled.

Egoism refers to a behavioral tendency that is essentially self-interested in seeking

pleasure, and escaping pain. E.g: self-interest, company profit, and efficiency.

Benevolence/ utilitarianism is associated with concerns to satisfy the interests of as

many people as possible. E.g. friendship, team interest, social responsibility.

Principled climates relates to internalization of universal standards and beliefs by the

members of an organization. E.g. personal morality, company rules and procedures,

19

laws and professional codes. Peterson (2002), Dickson et al. (2001), and Fritzsche

(2000) claim that the nine ethical climate types presented by Victor and Cullen are

still the most convincing and most widely used (Cullen et al., 2003; Deshpande, 1996;

Koh and Boo, 2001; Malloy and Agarwal, 2003; Joseph and Deshpande, 1997;

Peterson, 2002; Vaicys et al., 1996).

According to Randall (1998), the criterion used in ethical reasoning for an

egoism climate is maximizing self interest at the personal, company, or the societal

level. Ethical decisions that are made at the individual level represent an individual’s

internalized values and beliefs. Decisions at the local level satisfy the organization’s

best interest; whereas, ethical decisions at the cosmopolitan level of analysis

symbolize societal or economic interests.

On the other hand, the basic criteria used in ethical reasoning for the

benevolence ethical climate is on maximizing the best interest of organizational

members within prescribed boundaries. Individuals using the benevolence criteria and

an individual locus develop friendships without regard to belonging to the

organization. Local referents exert a collective influence that exists within the

immediate work setting (e.g. work teams). An individual operating from the

cosmopolitan perspective makes ethical decisions based on external factors that guide

socially responsible behavior. As for principle climate type, when an individual

utilizes principle precepts, he or she makes decisions based on the equitable

application of ethical rules and principles. If the person operates from the individual

perspective he or she uses internalized rules and principles. When the individual

operates from the local perspective he or she makes ethical decisions in alignment

with company rules. Often these rules exist in a code of ethics that originate outside of

the organization.

20

The ethical climate in an organization provides the collective norms that guide

behavior (Trevino, 1986). And, it is believed that an organization’s ethical climate is

strongly influenced by management’s ethical conduct. For employee who generally

found personal satisfaction in behaving ethically, a conflict or dissonance will arise if

the norms within the organization require employees to compromise their ethical

values in order to achieve organizational goals. A lack of congruence regarding the

ethical values of employees and their organization is typically referred to as an ethical

conflict. An ethical conflict pertains to situations in which an employee’s personal

ethics are not compatible with the organization’s business ethics and hence the

behavioral expectations and norms of the organization (Soutar et al., 1994). From the

perspective of employees, an ethical conflict usually involves situations in which the

employees feel pressured by their peers, supervisors, and other members of their

organization to compromise their personal values in order to achieve organizational

goals (Leicht and Fennell, 1997). This conflict will then lead to lower level of job

satisfaction, low organizational commitment, substandard job performance, job stress,

and turnover (Judge and Ferris, 1992; Caldwell and O’Reilly, 1990; Schneider et al.,

1995).

According to the cognitive dissonance viewpoint, a perceived lack of

congruence between the ethical standards of the employee and the organization

creates a need state that motivates the employee to eliminate the incongruence

(Moser, 1988). Thus, individuals experiencing an ethical conflict will lead to lower

level of job satisfaction and are expected to withdraw or resign from the organization

in an attempt to reduce the stress associated with cognitive dissonance (Janson and

Von Glinow, 1985). Similarly, argued from the justice theory perspective, employees

who find themselves in an organization that promotes the company’s interest at the

21

expense of other considerations including employees’ interest and ethical values will

feel that fundamental values and their personal rights have been violated. This is also

expected to lead to a lower level of job satisfaction.

From a study by Jaramillo, Mulki and Solomon (2006), it is observed that

ethical climate has both direct effect ( e.g. role stress, job performance) and indirect

effect (e.g. role conflict and role ambiguity) on job satisfaction. Sims and Keon

(1997) found that a match between the ethical climate of the organization and the

ethical preferences of employees was related to increase feelings of job satisfaction

and decreased intentions to turnover. Likewise, Byington and Johnston (1991)

concluded that employees who experience ethical conflict within their organizational

environment reported lower levels of organizational commitment. Ethical conflict

happens when employee’s personal ethical value is incongruent with their

organization’s ethical climate (Byington and Johnston (1991).

In a study of managers in a large non-profit organization in US, Deshpande

(1996) found that an organization could influence the job satisfaction of its employees

by manipulating the ethical climate. However, it is employee’s own individual ethics,

values and beliefs that influence their ethical decision making (Wotruba, 1990). Sims

and Kroeck (1994) did propose that employees who have achieved a match between

their current ethical work climate and their ethical preferences are more likely to

experience positive job satisfaction. Unfortunately, they did not find any significant

results.

22

As mixed findings are observed in prior studies, a null hypothesis is proposed

to test the effect of ethical climate on employees’ job satisfaction in Malaysian

context:

H2: Ethical climate in the organization has no significant effect on job satisfaction.

2.3 The association between ethical behavior and career success

Organizations that have adopted ethics would all agree that ethical behavior is

some abstract term that sounds nice and looks good on paper, but rather difficult to

put in practice. However, Deshpande, (1996); Victor and Cullen, (1987, 1988) had all

agreed that ethical climate of an organization have a strong influence on the

employee’s behavior.

Wotruba (1990) described that the ethical behavior of a decision maker can be

influenced by his or her characteristics. Wotruba developed the Ethical Decision/

Action Process (EDAP) framework based on the Four- Component Model of Moral

Behavior by Rest (1986). Based on this framework, an employee’s behavior is

influenced by two factors: 1) psychological (e.g. empathy, personal values) and 2)

cultural (tradition, belief). Meanwhile, Martin and Cullen (2006) stated that emotional

intelligence, ethical behavior of coworkers, and caring climate were significantly

correlated with ethical behavior of an employee. Some of the previous study

(Deshpande et al., 2006; Bratton, 2004; Keith, Pettijohn and Burnett, 2003) also

supported that coworkers have greater impact than managers on influencing ethical

behavior of employees. They believe that an employee will engage in an ethical

behavior when his or her peers also behave ethically.

23

Career success is the positive psychological or work related outcomes or

achievements that the individual accumulates as a result of work experiences (Seibert,

Kraimer, and Crant., 1999). According to previous research (Judge, Cable Boudreau

& Bretz, 1995; London & Stump, 1982; Seibert et al, 1999) career outcomes

indicators can either be in the form of observable rewards (extrinsic) such as pay

increase or promotions, or individual’s perception of satisfaction with job and with

career progress (intrinsic).

Luthans and Stajkovic’s (1999) meta-analysis on studies that was drawn from

the reinforcement theory stresses that individual behavior is encouraged by three

types of reinforces - money, feedback and social recognition. The link between

reward and ethical behavior is so strong that ignoring the ethical effect of reward can

result in disaster (Mitchell; Schaeffer; and Nelson; 2005). If an employee can be

punished for bad behavior, it is only fair to reward them for doing the right thing.

It is noted that behaviors are observable in which people can seen saying or

doing them. Due to this reason, the occasions on which people demonstrate them, or

fail to demonstrate them, can be tracked. Just like rewarding an employee’s

achievement, people can also be held accountable for the behaviors to be eligible for

some form of reward (Mitchell et. al., 2005). In a study done by Vitell and Davis

(1990), the relationship between ethics and job satisfaction are examined in a few

dimensions, including pay and promotion. It is found that there was a significant

correlation between all aspects of one’s job and degree of optimism about ethical

behavior being linked to success. Thus, in an organization where ethical behavior is

closely associated with career success, the ethical behavior of employee is reinforced.

Vitell and Davis observed that environment that allows ethically behaving employees

to be successful leads to the higher job satisfaction.

24

Contradict to this, Chonko and Hunt (1985) believes that unethical behavior

does help one’s personal career progress. Example was drawn from sales managers,

when they are pressured to achieve a short-term sales goal, it might induce a

temporary ethical ‘compromise’ believed necessary to achieve the goal (Rest, 1986;

Schweitzer, Ordonez and Douma; 2004,). However it is noted that short-term

behavior is not consistent with long-term ethical standards and intentions.

Based on the cognitive dissonance theory, the converse is true for companies

that reinforce unethical behavior, in which their employees are required to change

their behavior in such a fashion that it clashes with their attitudes and gives rise to

dissonance. Furthermore, to achieve team player status, individuals must adopt a “go

along to get along” mentality wherein the individual subjugates his or her own belief

system in favor of the company’s direction (Callanan, 2003).

Similarly, from the justice theory perspective, ethical employees who are not

rewarded or promoted because they are not willing to compromise their ethical values

will feel frustrated and hence experience a lower level of job satisfaction. Moreover,

individuals who fail to abide by the company cultural rules (unethical behavior) are

likely to face career plateau at best and outright dismissal at worst. Indeed, the

performance appraisal and reward systems within organizations can exact swift

punishment on those who violate cultural (unethical behavior) expectation.

Weighing both scenarios of employees practicing ethical behavior and non-

ethical behavior, there is empirical evidence that employees are more satisfied when

they perceive a relationship between ethical behavior and career success (Vitell and

Davis, 1990b; Viswesvaran and Despande, 1996). This leads to the following null

hypothesis:

25

H3: The association between ethical behavior and career success in the organization

has no significant effect on job satisfaction.

2.4 Moral awareness

Previous study by Koh and Boo (2001) had linked the top management

support for ethical behavior, ethical climate and association between ethical behavior

and career success towards job satisfaction. However, to make this study more

comprehensive, another component is added, which is moral awareness, to test its

relation to ethical work climate and it’s influence towards job satisfaction. Moral

awareness is a necessary and integral part of moral behavior (Blum, 1991; Rest,

1994). More than eight in ten managers use their own moral values to decide on

ethical issues Brigley (1995),

Several researchers have also acknowledged the possible connection between

ethical work climate and various constructs resembling moral awareness (Cohen,

1995; Cullen et al., 1989; Victor and Cullen, 1987; Wimbush and Shepard, 1994;

Wyld and Jones, 1997). Although most researchers seem to agree that social and

organizational factors have a strong impact on moral awareness, very few have

specified or tested those influences directly or indirectly on job satisfaction. Jones and

Ryan (1997, p. 665) noted, “Most of the models that purport to explain moral decision

making [which encompasses moral awareness] in organizations...contain an element

that refers to organizational or environmental influences on the moral agent, but few

provide much in the way of detail regarding how these influences work.”

Moral awareness can be defined as the degree to which an individual

recognizes the aspects of a situation that carry a reasonable likelihood of moral wrong

26

or harm to individuals, classes of people, or other entities regardless of human or non-

human, living or reifications (VanSandt et al., 2006). Harm is used as a criterion on

the assumptions that if a given action brings universal benefit there is no moral

dilemma, and that most people view morality in terms of harm to self or others

(Reynolds, 2002). This definition is similar to others used in the literature (Butterfield

et al., 1997; Rest, 1994). One significant difference between VanSandt et al.’s (2006)

definition and some of the others is the notion of “degree”. Butterfield et al. (1997),

Trevino (1986), define moral awareness as an either/or state. Either the moral agent is

aware of the moral components of a situation or she is not.

But as Blum (1991; 1994) emphasizes, moral awareness is a more complex

state than this implies. Blum is the only person who has written about the process and

state of moral perception to any significant extent. His primary purposes in doing so

were to distinguish perception from judgment in moral reflection and to emphasize

the importance of awareness in the process (Blum, 1991; Blum, 1994). He includes in

perception “anything contributing to or encompassed within the agent’s take on the

situation – his salience-perception – prior to his deliberating about what to do” (Blum,

1991, p. 707). This includes not only the way in which people perceive particular

situations, but also their ability to recognize the morally significant components as

moral situations.

To further explicate this idea, Blum discusses three aspects of complete moral

awareness. The first of these is an initial recognition of the moral component of a

situation, simply perceiving that a moral “problem” potentially exists. The second

aspect involves fully grasping what the moral component of a situation means to the

party(ies) affected. He notes, “Adequate moral perception is not only a matter of

making ‘moral discriminations’ – noting morally distinct elements in the situation. It

27

is also a matter of the moral aspect of the situation, to weigh adequately within one’s

view of the situation.” This view is similar to David Hume’s and Adam Smith’s

emphasis on the role of sympathy in overcoming exclusive self-interest (Hume, 1751;

Smith, 1759/1986).

The third aspect of full moral perception involves the agent’s ability to

interpret situations in ways that brings out their moral components. For moral

awareness in business situations, it seems that being able to see a situation in a certain

way or from a certain viewpoint is important. Organizational climate wields

significant influence over individuals’ perceptions and behaviors (Jones and Ryan,

1998). Many organizations prompt their members to think only of the effects of their

actions on profits (Hare, 2004). If the climate in an organization discourages the

members from making construal about anything but profits, the members’ abilities to

perceive moral components will most likely be inhibited. Gioia (1992) has shown the

constraints that organizational scripts place on individuals’ cognitive processes.

In a similar vein, framing or problem setting plays a critical role in problem

solving (Baucus and Rechner, 1995, 1996; Rechner and Baucus, 1997; Stephens and

Lewin, 1992). Ethical work climate is a broader construct than either scripts or

frames, and as such, should wield even more influence over a group member’s ability

to recognize moral elements in a situation. Measurement of moral awareness includes

the existence of salience, sympathy, and construal, as described by Blum (1991;

1994). But the key element in the moral awareness construct is the ability to consider

possible harm to others.

As a general rule, one would expect that an individual’s moral awareness

would increase with the degree of concern on what his/her ethical criteria hold for

other parties. This contention is based on the idea that an act that will benefit the

28

moral agent or one’s immediate contacts, but harm others outside of that “scope of

justice” would not elicit the agent’s moral awareness unless her locus of analysis is

sufficiently broad (Deutsch, 1974, 1985). As Jones (1991) points out, proximity of

moral issues tends to increase moral intensity, but that is a different issue than what is

being considered here. Proximity is a characteristic of the moral situation itself, which

is beyond the scope of this research project. The development of the ethical work

climate construct, with its ideas of “whom” and “what” are considered in moral

deliberations supports this generalization (Victor and Cullen, 1987, 1988).

The other major component of the definition of moral awareness is situational,

which refers to the ability to see elements of a situation as morally significant. Since

these elements may be very different from situation to situation, it would be difficult,

if not impossible, to make any meaningful generalizations about this aspect of the

definition. As Blum (1991, p. 716) said, “In a way it is misleading to speak of

someone as ‘sensitive to particulars’ (or ‘good at perceiving the moral character of

particulars’) tout court. Some people are better at perceiving some sorts of particulars

than other sorts.”

Therefore, in formulating hypotheses regarding the relationships between

moral awareness and ethical work climate which contributes to job satisfaction, a null

hypothesis is proposed to test on the relationship between moral awareness and job

satisfaction among managers in Malaysia:

H4: There is high level of moral awareness among members of organization with

ethical work climate, however it has no significant effect on job satisfaction.

29

The next section discusses the literature review on the dependant variable- Job

Satisfaction as well as the literatures on the association between organizational ethics

and job satisfaction.

2.5 Job satisfaction

Job satisfaction has been a key concept in the study of organizations. The

earliest systematic attempts to study job satisfaction date back to the 1930s

(Padmanabhan, 2005). To date, numerous studies have been conducted across the

globe experimenting different elements on job satisfaction, and a handful of them

were also done in Malaysia (e.g., Rowden & Ahmad, 2000; Samad, 2005). Robbins

(2005) cites the Wyatt Company’s 1989 national WorkAmerica study had identified

wide dimensions of job satisfaction, such as work organization, working conditions,

communications, job performance and performance review, coworkers, supervision,

company management, pay, benefits, career development and training, job content

and satisfaction, and company image and change.\

Padmanabhan (2005) summarizes the concept of job satisfaction as follows:

an individual’s overall job satisfaction is the overall feeling one gets from satisfaction

with different aspects of the job. According to Moorman (1993), job satisfaction is a

combination of cognitive and affective contentment of an employee. Affective

satisfaction, which is founded on an overall positive emotional assessment of the

employee’s job, focuses on their mood when working, i.e. whether the job induces a

good mood and positive feeling when working. In contrast, cognitive satisfaction is

the fulfilment an employee gets from a more logical and rational appraisal such as the

job conditions, opportunities or outcomes. Hence, it describes the job and not the

feelings.

30

2.6 Organizational Ethics and Job Satisfaction

According to Koh and Boo (2001), the link between organizational ethics and

job satisfaction can be explained by the organizational justice theory and cognitive

dissonance theory.

The concept of organizational justice is central to understanding a wide range

of human attitudes and behaviours in organizations. The underlying premise is that

the justice perceptions of employees affect their job attitudes and organizational

outcomes such as job satisfaction and turnover intention (Hartman et al., 1999).

Organizational justice is often dichotomized into two components: (1) distributive

justice which addresses the fairness of managerial decisions relative to the distribution

of outcomes such as pay and promotion, and (2) procedural justice which focuses on

how such managerial decisions are made. Dailey and Kirk (1992) found that

employee perceptions of both distributive and procedural justice play a central role in

relation to job satisfaction. Sweeney and McFarlin (1993) and Hartman et al. (1999),

however, found that distributive justice predicts job satisfaction better than procedural

justice does.

In a number of studies on organizational situations cited by Koh and Boo

(2001), for example, layoffs, job insecurity, unfair promotions, selection and hiring,

and part-time employment, fairness, equity and favourable perceptions by the

employees are shown to lead to positive job attitudes and outcomes. Findings by

Singhapakdi and Vitell (1991) reinforced this notion by concluding that ethically

sensitive salespeople prefer to see a punitive or non-punitive action response, as

opposed to a no-action response, taken by their firms in reaction to unethical

behaviour by employees.

31

Conceptually, Lind’s (1992) fairness heuristic states that perceptions of

fairness in one area influence perceptions of fairness in another area. In other words, it

means that employees who perceive their organizations to be ethical are also likely to

perceive their organizations as being fair to them. This, in turn, is likely to enhance

employee job satisfaction. Hence, organizational ethics and job satisfaction expected

to be positively linked.

According to the cognitive dissonance theory, first proposed by Festinger in

1942, individuals strive to minimize dissonance in their environment. Assuming that

employees generally strive to be individually ethical, dissonance in the form of

inconsistencies between their ethical value system and the ethical climate of the

organizations will result in distress and dissatisfaction in the situation. Furthermore,

top management sets the organizational climate for employees. Thus, any discrepancy

between employees’ internal standards of ethics and their perceptions of top

management will result in a moral conflict and cognitive dissonance (Festinger,

1942).

Koh and Boo (2001) also cited several more recent studies by Sims and

Kroeck (1994), Viswesvaran and Deshpande (1996), and Schwepker (1999) which

found that the lack of an ethical fit between employees and their organization can

result in distress and job dissatisfaction, among other things. Job satisfaction of

salespersons were found to be weakened if they perceive the the organization

rewarding the unethical behaviours of co-workers (Bellizzi and Hite, 1989).

In view of the above, if employees perceive strong top management support

for ethical behaviour, a favourable ethical climate, and a strong association between

ethical behaviour and career success in the organization, then they are also likely to

have a higher level of job satisfaction. Vitell and Davis (1990) are in the opinion that

32

if the “ethical” correlates of job satisfaction can be identified, then managers may be

able to find the best ways to influence the organization’s ethical climate so as to

enhance job satisfaction while maintaining an ethical environment.

2.7 Prior Literatures on the relationship between Organizational Ethics and

Job satisfaction

In response to a lack of cross-cultural studies involving non-Western countries

on business ethics, Honeycutt et al. (1995) conducted a research on ethical similarities

and differences, and job-related constructs among 160 Taiwanese and 91 U.S. sales

personnel in the highly-competitive automotive industry. Their findings include that

ethical perceptions of the industry negatively influenced job satisfaction levels of both

Taiwan and U.S. samples. However, this finding may indicate that if ethical standards

at the dealership are low and the employee perceives the overall industry to have

higher ethical standards, the salesperson would understandably become disenchanted

with his or her job.

These findings seem contradicted by another recent study by Jaramillo et al.

(2006) where 138 U.S. salesperson were surveyed to investigate the role of ethical

climate on their role stress, job attitudes, turnover intention and job performance. In

their research, the findings indicated that ethical climate resulted in lower role conflict

and role ambiguity and higher satisfaction, which, in turn, led to lower turnover

intention and increased organizational commitment. Organizational commitment, in

this case, was found to be a significant predictor of job performance. These research

findings have important implications for both practitioners and academicians, because

they demonstrate that creating an ethical climate is not only the right thing to do but

also has significant benefits for both the salesperson and the organization.

33

Sims and Kroeck (1994) studied the influence of ethical fit on employee

attitudes and intentions to turnover. 66 employees working in five different

departments in a medium-sized hospital were surveyed. They used the Minnesota

Satisfaction Questionnaire to measure intrinsic and extrinsic satisfaction of the

employees. Their findings revealed that job satisfaction was not significantly related

to the fit between the current ethical work climate and the employees’ expressed

preferences. The authors suggested that this could be due to the fact that satisfaction is

a measure of job attitudes, while ethical work climates are a measure of the

organization, i.e. a conceptual difference. They further suggested that an

organizational measure of satisfaction should be used instead to determine if

organizational satisfaction is influenced by ethical work climate.

Vitell and Davis (1990a) examined empirically the relationship between ethics

and job satisfaction for 61 Management Information System (MIS) professionals.

Their results indicated that MIS professionals were more satisfied with the various

measured dimensions of their job (pay, promotions, co-workers, supervisors, the work

itself) when top management stresses ethical behavior and when they are optimistic

about the relationship between ethics and success within their firms. The one

exception to this was pay satisfaction which was unrelated to these constructions.

One’s sense of social responsibility was also found to be relatively unrelated to job

satisfaction.

Based on the literature reviews above, the research framework for the study

can be represented by Figure 2.1. In particular, it suggests that ethics in organizations

has an impact upon the job satisfaction of employees. Organizational ethics comprises

top management support for ethical behavior, the ethical climate in the organization,

association between ethical behavior and career success and moral awareness. Job

34

satisfaction of employees can be measured in terms of the following dimensions: pay,

promotion, co-workers, supervision, work and overall of five different dimensions.

Viswesvaran et al. (1998) postulated and obtained evidence that the impact of ethics is

most pronounced on the job satisfaction dimension of supervision.

Figure 2.1 : Research Framework

Chapter Summary:

Chapter two thus far had examined previous literatures for each variable of

organizational ethics and job satisfaction. Chapter three will focus on the research

methodology, elaborating on the hypotheses, data sample and collection method,

questionnaire design and data analysis techniques.

Top management support

for ethical behavior

Ethical Climate

1. Egoistic

2. Benevolent

3. Principled

Association between ethical

behavior and career success

Moral Awareness

Job Satisfaction

1. Pay

2. Promotion

3. Co-workers

4. Supervision

5. Work

6. Overall

35

CHAPTER 3: RESEARCH METHODOLOGY

Chapter Introduction:

This chapter describes the research design of this study and sampling

technique. The chapter also elaborates on the survey instrument, data collection

methodology and the statistical techniques used to analyze the data found in this

study.

3.1 Development of Hypotheses

From the review of the related literature on chapter two, a total of four

hypotheses have been developed. These include:

Hypotheses 1:

H1: Top management support for ethical behavior has no significant effect on job

satisfaction.

Hypotheses 2:

H2: Ethical climate in the organization has no significant effect on job satisfaction.

Hypotheses 3:

H3: The association between ethical behavior and career success in the organization

has no significant effect on job satisfaction

36

Hypotheses 4:

H4: There is high level of moral awareness among members of organization with

ethical work climate, however it has no significant effect on job satisfaction.

3.2 Research Design

Generally, descriptive design is employed in order to ascertain and be able to

describe the characteristics of the variables of interest in a situation. Descriptive

design is undertaken in organizations in order to learn about and describe the

characteristics of group of employees. As to discover relationships and interaction

among organizational ethics and job satisfaction, descriptive design is applied for this

study. A cross-sectional study was done in this study where investigation only made

at a single point of time. The purpose of this study is to gather data that would be

pertinent to find answers to research questions. Thus, data collection at one point in

time should be sufficient.

The unit of analysis refers to the level of aggregation of the data collected

during data analysis stage. As this study is to gauge employees individual level of

analysis, questionnaires were distributed to part time students enrolled in the MBA

program in University of Malaya and working manager who did not enroll any MBA

program. The data gathere from each individual should be treated as an individual

data source.

37

3.3 Sampling Technique

Nonprobability sampling, i.e. convenience sampling method was adopted for

this study. Convenience sampling involves sampling procedure used to obtain units or

people who are most conveniently available.

Owing the fact that the purpose of this study is to examine the relationship

between organizational ethics and job satisfaction among managers in Malaysia, the

research questionnaire was administered to a convenience sample of 200 part time

students enrolled in the MBA program in University of Malaya and working manager

who did not enroll any MBA program. It can be argued that MBA students would bias

towards this survey and it can be reduced by selecting sample from another

population. Hence, this combination of sample will give meaningful responses to the

questionnaire.

3.4 Data Collection Procedure

Both Primary and secondary data were collected for this study. For the start,

secondary data was collected in order to have better understanding on the subject

under study. Previous researchers on the study subject were secured through journals,

electronic journals, magazines, books, dissertations and other printed materials.

For the primary data collection, a sample of 200 respondents was taken from

the population of part time MBA program students in University of Malaya and

working manager who did not enroll any MBA program. Questionnaires were

disseminated to the respondents based on purposive convenience sampling basis and

it was done in two and a half weeks period. The questionnaires were personally

distributed and were collected right after respondents complete it. At the same time,

38

questionnaires were also sent out by e-mail and some had been distributed via friend’s

networks. Only responses that were received within the two and a half weeks period

were considered for this study. Follow-up emails had been sent out after one week

from the date of distribution in order to secure better response rate.

It was stressed that questionnaire were confidential and anonymity of

respondents were guaranteed. Furthermore, the respondents were informed of the

purpose of the study. Also, it was ensured that the sample was drawn from

respondents with varied backgrounds in terms of age group, gender, education level,

marital status, job position and working experience.

A total of 200 survey questionnaires were disseminated and 123 usable

responses were received, giving a respondent rate of 62%. The unusable

questionnaires were those containing missing value or selected the same scale for all

the questions.

3.5 Research Instruments

The questionnaire for this study consists of three parts, i.e. (1) Job

Satisfaction, (2) Organizational Ethics and (3) Demographic Information was

employed to collect relevant data to be measured in order to attain the objectives of

this study.

The dependent variable, job satisfaction, is measured using a 20-item

instrument which has been used by previous researchers in the business ethics area.

(e.g. Vitell and Davis, 1990b; Joseph and Deshpande, 1996; Viswesvaran et al.,

1998). This instrument for overall job satisfaction is derived from satisfaction with

pay, promotion, co-workers, supervision and work. Each dimension comprises four

39

items measured on a scale ranging from 1 (strongly disagree) to 4 (strongly agree). A

higher level of job satisfaction is indicated by a higher mean score.

The four independent variables in the study are measured as follows. For top

management support for ethical behavior, the four items developed by Koh and Boo

(2001) to measure top management action are adapted to give a 4-items measure

using a 4-point scale, ranging from 1 (strongly disagree) to 4 (strongly agree). A high

mean score represents strong top management support for ethical behavior.

To measure the association between ethical behavior and career success in the

organization, Koh and Boo (2001) is used. Each item is similarly measured on a 4-

point scale, ranging from 1 (strongly disagree) to 4 (strongly agree). A high mean

score represents a strong association between ethical behavior and career success in

the organization.

Ethical climate in organizations adapted the questionnaire that developed by

Cullen et al. (1993). The following three categories of ethical climate are assessed: (1)

egoistic, which emphasizes the company’s interest; (2) benevolent, which emphasizes

the employees’ interest; and (3) principled, which emphasizes compliance with rules

and standard operating procedures. Each of three categories is measured by four items

on a 4-point scale, ranging from 1 (strongly disagree) to 4 (strongly agree). A high

mean score represents a strong association between ethical behavior and ethical

climates in organizations.

The additional independent variable was tested through the questionnaire that

developed by VanSant et al. (2006). It consist of seven items and each of the items

measure using a 4-point scale, ranging from 1 (strongly disagree) to 4 (strongly

agree). A high mean score represents moral awareness strongly associated with ethical

behavior.

40

The items to measure the dependent variable (i.e., job satisfaction) and

independent variables (i.e., top management support for ethical behavior, ethical

climate, association between ethical behavior and career success and moral

awareness) are presented in the Table 3.1 and Table 3.2.

Table 3.1 Job Satisfaction Dimensions and its items

Dimensions Items

1. My organization pays better than competitors.

2. My pay is adequate considering the

responsibilities I have.

3. I am underpaid for what I do.

Pay

4. My fringe benefits are generous.

1. I do not like the basis on which my organization

promotes people.

2. Promotions are infrequent in my organization.

3. If I do a good job, I am likely to get promoted.

Promotion

4. I am satisfied with my rate of advancement.

1. The people that I work with do not give me

enough support.

2. In my organization, when I ask people to do

things, the job gets done.

3. I enjoy working with the people in my

organization.

Co-workers

4. In my organization, I work with responsible

people.

1. The managers I work for back me up.

2. The managers I work for are competent.

3. My supervisors do not listen to me.

Supervision

4. Management does not treat me fairly.

41

1. My job is interesting.

2. I feel good about the amount of responsibility in

my job.

3. I would rather be doing another job.

Work

4. I get little sense of accomplishment from doing

my job.

Table 3.2 Organizational Ethics Dimensions and its items

Dimensions Items

1. Top management in my organization has clearly

conveyed that unethical behavior will not be

tolerated.

2. Top management in my organization should have

higher ethical standards than they do now.

3. If a manager in my organization is discovered to

have engaged in unethical behavior that results

primarily in personal gain rather than corporate

gain, he will be promptly reprimanded.

Top management

support for ethical

behavior

4. If a manager in my organization is discovered to

have engaged in unethical behavior, he will be

promptly reprimanded even if the behavior results

primarily in corporate gain.

1. My organization emphasizes the importance of

furthering its interests.

2. Employees in my organization are not expected to

be concerned with the organization's interests all

the time.

3. All decisions and actions in my organization are

expected to contribute to the organization's

interests.

Ethical climate

(egoistic)

4. Work that hurts my organization's interests can be

acceptable.

Ethical climate

(benevolent)

1. Concern for employees is prevalent in my

organization.

2. My organization does not emphasize employee

welfare.

3. All decisions and actions in my organization are

expected to result in what is generally best for

everyone.

4. My organization does not consider the well-being

of all employees.

42

Ethical climate

(principled)

1. Compliance with organization rules and

procedures is very important in my organization.

2. Employees in my organization are not expected to

stick to organization policies strictly.

3. People who do not follow organization rules and

procedures are not viewed favorably in my

organization.

4. My organization does not emphasize the

importance of its rules, procedures and policies.

1. Successful managers in my organization are more

ethical than unsuccessful managers.

2. In order to succeed in my organization, it is often

necessary to compromise one's ethics.

3. Successful managers in my organization withhold

information that is detrimental to their self-

interest.

4. Successful managers in my organization make

rivals look bad in the eyes of important people.

5. Successful managers in my organization look for

a "scape-goat" when they feel they may be

associated with failure.

6. Successful managers in my organization take

credit for the ideas and accomplishments of

others.

Association between

ethical behavior and

career success

7. Ethical behavior is important for success in my

organization.

1. In this company, people protect their own interest

above other considerations.

2. There is no room for one’s own personal morals

or ethics in this company.

3. It is expected that each individual is cared for

when making decisions here.

4. The most important concern is the good of all the

people in the company.

5. In this company, people are expected to follow

their own personal and moral beliefs.

6. In this company, people are guided by their own

personal ethics.

Moral Awareness

7. The most important consideration in this

company is each person’s sense of right and

wrong.

43

3.6 Data Analysis Technique

The returned questionnaires were first screened for completeness and

incomplete survey questionnaire were rejected. The completed data were analyzed

using the Statistical Programmer for Social Science (SPSS) computer program. The

scores for the negatively phrased items were reversed before analysis.

The survey questionnaire responses were coded according to the scale

measurements. Some recoding was necessary using SPSS ‘transform’ function so that

the data could be grouped together for statistical analysis.

Descriptive statistics (i.e., frequency distributions, means and standard

deviations) are used to develop a profile of the respondents, summarize the variables

and illustrate central tendency. Measurement of reliability is useful in determining the

degree to which observations are consistent. Thus, alpha coefficients (Cronbach,

1951) are computed to assess the reliability of job satisfaction, top management

support for ethical behavior, ethical climate, association between ethical behavior and

career success in the organization and moral awareness. To better understand the

relationships among the variables, correlation analysis is performed to generate the

correlation matrix.

Finally, to test the research hypothesis, multiple regression analysis is used.

This statistical method is appropriate as job satisfaction, top management support for

ethical behavior, ethical climate, association between ethical behavior and career

success in the organization and moral awareness are measured on an interval scale.

Such an approach is also consistent with those of previous studies from Koh and Boo

(2001). As there are multiple items for each construct, the average of the multiple

items is used in the multiple regression. As ethical climate is measured as a

44

categorical variable (egoistic, benevolent or principled), it is coded as two dummy

variables with the egoistic ethical climate as the reference point.

Chapter Summary:

This Chapter has outlined the development of hypotheses, research methods

and design and data analysis techniques. The next chapter discusses on summary

statistics, analyses of measures, testing of hypotheses and reveals the research result.

45

CHAPTER 4: RESEARCH RESULTS

Chapter Introduction:

This chapter organizes the findings of the survey and presents the research

results. Firstly, this chapter describes the summary statistics of respondents and

characteristics of respondents, followed by the analysis and testing of hypotheses and

summarizes the overall key findings. The Statistical Package for the Social Science

(SPSS) software was used to analyze the data collected from the survey.

4.1 Summary Statistics

4.1.1 Sample Characteristics

Majority of the respondents is in the age group of between 25 and 45 years old

(90%), and male (53%). Most of the respondents are in the lower (54%) and middle

(37%) level managerial positions. In terms of working experience, 31% have at least

five years of working experience. This demographic characteristic of respondents is

shown in table 4.1.

(As pointed out by an anonymous referee, MBA students with less than five

years of working experience may not be good surrogates for managers. Koh and Boo

(2001) did access this confounding factor, differences in results (i.e. regression

intercepts as well as slopes) attributable to a dummy variable representing five years

or more of working experience were accessed. No statistical significant was found.

Hence, results relating to the entire sample are presented. Therefore, the same results

were adopted whereby the combination of respondents is more relevant to this survey.

46

Table 4.1 Demographic Characteristics of Respondents

Description Frequency Percentage

Age 20-24 years

25-29 years

30-35 years

36-39 years

40-44 years

45 years and above

Total

20

26

32

18

15

12

123

26%

21%

16%

15%

12%

10%

100%

Gender Male

Female

Total

65

58

123

53%

47%

100%

Education Level Secondary

Diploma

Degree

Post Graduate

Total

6

17

70

30

123

5%

14%

57%

24%

100%

Marital Status Single

Married

Total

73

50

123

59%

41%

100%

Current Job Position Administrative/clerical

Technician

Executive

Assistant Manager

Manager/Senior Mgr

Others

Total

39

27

21

25

11

-

123

32%

22%

17%

20%

9%

-

100%

Type of Organization Private Limited

Government

Government-linked (GLC)

Others

Total

43

36

26

18

123

35%

29%

21%

15%

100%

Size of Organization Less than 50 employees

51-199 employees

200-499 employees

500 or more employees

Total

22

19

44

38

123

18%

15%

36%

31%

100%

Years served in

current Organization

Less than 5 years

5-10 years

More than 10 years

Total

85

29

9

123

69%

24%

7%

100%

47

4.2 Analyses of Measures

4.2.1 Descriptive statistics and Alpha Coefficients

The descriptive statistics and alpha coefficient of job satisfaction (pay,

promotion, co-workers, supervision and work), top management support for ethical

behavior, ethical climate (egoistic, benevolent or principled), association between

ethical behavior and career success, and moral awareness are summarized in table 4.2.

As shown, the alpha coefficients range from 0.471 to 0.819. That is, some of the

variables have reliability less that the typical acceptable benchmark of 0.70 (Hair et

al., 1998). In particular, job satisfaction (pay, promotion, co-workers), ethical climate

(egoistic, principled) and moral awareness have alpha coefficients 0.625, 0.566,

0.662, 0.533, 0.577 and 0.471 respectively.

It is noted that some of the alpha coefficients are consistent with prior studies.

For example, Koh and Boo (2001) reported an alpha coefficient of 0.74 for their

measure of satisfaction with supervision, while this study reported an alpha

coefficient of 0.76. In most cases, this study’s alpha coefficients are generally lower

than Koh and Boo’s (2001), however, the findings follow a similar trend. For

example, the alpha coefficient for egoistic ethical climate reported by Koh and Boo

(2001) is quite low (i.e. 0.55), which is comparable to this study (0.533). A mitigating

factor is that satisfaction is a multi-faceted concept, and individually, each aspect of

satisfaction being studied comprises one of the many facets of job satisfaction. In

addition, egoistic ethical climate is not used directly in the data analysis. Instead it is

used with two other measures to derive two dummy variables to capture the

organizations ethical climate.

48

Generally, variables with low reliability lead to an underestimation of the

actual strength of the relationships among them (Dooley, 1995). Thus, the error is on

the conservative side.

Table 4.2 Descriptive statistics and alpha coefficient of variables

Variable Mean Std.

Dev.

Alpha coefficient

(present study)

Alpha coefficient

(Koh & Boo,

2001)

Job satisfaction (Pay) 2.55 0.47 0.625 0.71

Job satisfaction (Promotion) 2.43 0.50 0.566 0.63

Job satisfaction (Co-workers) 2.71 0.51 0.662 0.79

Job satisfaction (Supervision) 2.76 0.57 0.759 0.74

Job satisfaction (Work) 2.65 0.52 0.716

0.75

Job satisfaction (Overall) 2.62 0.35 0.819 0.89

Top management support for ethical

behavior

2.56 0.48 0.814

0.77

Ethical climate (Egoistic) 2.82 0.41 0.533

0.55

Ethical climate (Benevolent) 2.61 0.52 0.755

0.77

Ethical climate (Principled) 2.70 0.48 0.577 0.76

Association between Ethical Behavior and

Career Success

2.49 0.40 0.707

0.84

Moral Awareness 2.64 0.29 0.471

-

4.2.2 Correlation Coefficients

The correlation matrix of the variables in the regression model is given in

Table 4.3. As can be seen, all the measures of job satisfaction are significantly and

positively correlated among themselves. Top management support for ethical

behavior is significantly and positively correlated with all measures of job satisfaction

with the exception of satisfaction with work. On the other hand, association between

ethical behavior and career success is significantly and positively correlated with all

measures of job satisfaction. Moral awareness, however, is significantly and

positively correlated with job satisfaction except for satisfaction with supervisor, and

is negatively correlated with satisfaction with work.

49

Benevolent and principled ethical climates are found to be negatively

correlated to each other; this is expected as the two climates are dissimilar. Based on

the correlations, only the benevolent ethical climate is found to be significantly and

positively correlated with satisfaction with supervisor, and with overall job

satisfaction. This finding is opposite of Koh and Boo’s (2001), who found that

principled ethical climate to be correlated with job satisfaction.

Correlation of matrix of variables

M_JSPAY M_JSPRO M_JSCOW M_JSSUP M_JSWOR M_OJS

M_TOPMG

T

DUM_BE

N DUM_PRI M_CAREER

Pearson Correlation 1 .216(**) .197(*) .226(**) .250(**) .536(**) .246(**) .102 .087 .266(**)

Sig. (1-tailed) .008 .014 .006 .003 .000 .003 .130 .170 .001

N 123 123 123 123 123 123 123 123 123 123

Pearson Correlation .216(**) 1 .329(**) .305(**) .357(**) .646(**) .295(**) .099 .023 .192(*)

Sig. (1-tailed) .008 .000 .000 .000 .000 .000 .138 .399 .017

N 123 123 123 123 123 123 123 123 123 123

Pearson Correlation .197(*) .329(**) 1 .531(**) .446(**) .745(**) .215(**) .149 .117 .416(**)

Sig. (1-tailed) .014 .000 .000 .000 .000 .008 .050 .100 .000

N 123 123 123 123 123 123 123 123 123 123

Pearson Correlation .226(**) .305(**) .531(**) 1 .362(**) .737(**) .274(**) .276(**) .065 .280(**)

Sig. (1-tailed) .006 .000 .000 .000 .000 .001 .001 .236 .001

N 123 123 123 123 123 123 123 123 123 123

Pearson Correlation .250(**) .357(**) .446(**) .362(**) 1 .716(**) .088 .047 .096 .270(**)

Sig. (1-tailed) .003 .000 .000 .000 .000 .168 .303 .145 .001

N 123 123 123 123 123 123 123 123 123 123

Pearson Correlation .536(**) .646(**) .745(**) .737(**) .716(**) 1 .329(**) .203(*) .114 .419(**)

Sig. (1-tailed) .000 .000 .000 .000 .000 .000 .012 .105 .000

N 123 123 123 123 123 123 123 123 123 123

Pearson Correlation .246(**) .295(**) .215(**) .274(**) .088 .329(**) 1 .318(**) .160(*) .259(**)

Sig. (1-tailed) .003 .000 .008 .001 .168 .000 .000 .039 .002

N 123 123 123 123 123 123 123 123 123 123

Pearson Correlation .102 .099 .149 .276(**) .047 .203(*) .318(**) 1 -.059 .076

Sig. (1-tailed) .130 .138 .050 .001 .303 .012 .000 .260 .202

N 123 123 123 123 123 123 123 123 123 123

Pearson Correlation .087 .023 .117 .065 .096 .114 .160(*) -.059 1 .062

Sig. (1-tailed) .170 .399 .100 .236 .145 .105 .039 .260 .248

N 123 123 123 123 123 123 123 123 123 123

Pearson Correlation .266(**) .192(*) .416(**) .280(**) .270(**) .419(**) .259(**) .076 .062 1

Sig. (1-tailed) .001 .017 .000 .001 .001 .000 .002 .202 .248

N 123 123 123 123 123 123 123 123 123 123

Pearson Correlation .228(**) .259(**) .254(**) .084 -.041 .224(**) .377(**) .172(*) .104 .380(**)

Sig. (1-tailed) .006 .002 .002 .177 .326 .006 .000 .028 .125 .000

N 123 123 123 123 123 123 123 123 123 123

** Correlation is significant at the 0.01 level (1-tailed).

* Correlation is significant at the 0.05 level (1-tailed).

M_JSPAY = Job satisfaction (Pay) M_TOPMGT = Top management support for ethical behavior

M_JSPRO = Job satisfaction (Promotion) DUM_BEN = Benevolent ethical climate (Dummy)

M_JSCOW = Job satisfaction (Co-workers) DUM_PRI = Principled ethical climate (Dummy)

M_JSSUP = Job satisfaction (Supervision) M_CAREER = Association between Ethical Behavior and Career Success

M_JSWOR = Job satisfaction (Work) M_MORAL = Moral Awareness

M_OJS = Job satisfaction (Overall)

51

4.2.3 Multiple regression analysis results

A total of six regression models were performed – for overall job satisfaction

as well as satisfaction with pay, promotion, co-workers, supervision and works. The

multiple regression analysis results are summarized in Table 4.4.

When considering the separate individual facets of job satisfaction, it was

found that management support for ethical behavior significantly affects satisfaction

for promotion and overall job satisfaction. Benevolent ethical climate significantly

affects satisfaction with supervision, whereas principled ethical climate did not seem

to affect any aspects of job satisfaction. Association between ethical behavior and

career success was found to significantly affect satisfaction for pay, co-workers,

supervision, work and overall job satisfaction. Moral awareness significantly affects

satisfaction with work.

From Table 4.4, the highest R-square value among the individual facets of job

satisfaction shown by satisfaction with co-workers (R-square = 0.204) indicates that

ethics in organization enhances job satisfaction with co-workers to the largest extent.

Incidentally, Viswesvaran et al. (1998) suggested that ethics in organization should

enhance satisfaction with all facets of the job, especially job satisfaction with

supervision.

4.3 Testing of Hypotheses

For the purpose of this study and for hypotheses testing, the effects of ethics

variables on the overall job satisfaction are of paramount importance. As shown in

Panel F of Table 4.3, the regression model is significant (p-value = 0.000) and has an

52

R-square of 0.244 (adjusted R-square = 0.212). That is 24.4% of the variation in

employee overall job satisfaction can be explained by the variation in the ethics

variables in organizations. The R-square level is considered adequate as the objective

of the model is to assess the direction and strength of the association between

organizational ethics and job satisfaction, and not to predict job satisfaction.

To test the four research hypotheses, the significance of the t-tests for the

model coefficients is assessed. As shown, the p-value for “top management support

for ethical behavior” is 0.042, which is significant. Hence, the null hypothesis H1 (that

top management support for ethical behavior has not significant effect on job

satisfaction) can be rejected. In particular, the positive coefficient indicates that a

stronger top management support for ethical behavior is associated a higher level of

job satisfaction in the organization. This finding is consistent with expectation.

Two dummy variables are included in the regression model to represent

ethical climate; namely, “benevolent ethical climate” and “principled ethical climate”.

The reference group (coded as “0” for both dummy variables) is “egoistic ethical

climate”. At a significance level of 0.05, both “benevolent ethical climate” and

“principled ethical climate” are not significant (p-values = 0.159 and 0.398

respectively). Hence, the null hypothesis H2 (that ethical climate in the organization

has no significant effect on job satisfaction) can be accepted. This indicated that a

more favorable ethical climate is not associated with a higher level of job satisfaction

in the organization, which is contrary to expectations.

The p-value for the “association between ethical behavior and career success”

is highly significant at 0.000. Therefore, the null hypothesis H3 (that the association

between ethical behavior and career success in the organization has no significant

effect on job satisfaction) can be rejected. As expected, the coefficient is positive.That

53

is, a stronger association is linked to a higher level of job satisfaction; a finding

similarly obtained in Viswesvaran and Deshpande (1996).

Finally, the p-value for the “moral awareness” is not significant (p-value =

0.888). Therefore, the null hypothesis H4 (that moral awareness has no significant

effect on job satisfaction) can be accepted. Interestingly, the slight negative

coefficient indicates that a higher level of moral awareness may actually reduce the

level of job satisfaction in the organization, although this relationship is not

significant.

The regression equation obtained form the analysis is:

Overall job satisfaction = 0.138 (Top management support for ethical behavior)

+ 0.316 (Association between ethical behavior and career success)

+ 1.474

54

Table 4.4 Results of multiple regression analysis

Variable Coefficient t-value p-value*

A. Job satisfaction (Pay)

Intercept 1.216 2.991 0.003

Top management support 0.143 1.474 0.143

Benevolent ethical climate (dummy) 0.028 0.299 0.765

Principled ethical climate (dummy) 0.042 0.490 0.625

Ethical behavior and career success 0.221 1.981 0.050

Moral Awareness 0.150 0.921 0.359

Model R2 = 0.114; Adjusted = 0.076 F = 3.007 0.014

B. Job satisfaction (Promotion)

Intercept 0.928 2.153 0.033

Top management support 0.234 2.263 0.025

Benevolent ethical climate (dummy) -0.007 -0.068 0.946

Principled ethical climate (dummy) -0.034 -0.377 0.707

Ethical behavior and career success 0.099 0.838 0.403

Moral Awareness 0.257 1.491 0.139

Model R2 = 0.119; Adjusted = 0.081 F = 3.147 0.011

C. Job satisfaction (Co-workers)

Intercept 1.017 2.434 0.016

Top management support 0.052 0.516 0.607

Benevolent ethical climate (dummy) 0.106 1.117 0.266

Principled ethical climate (dummy) 0.088 1.002 0.318

Ethical behavior and career success 0.463 4.034 0.000

Moral Awareness 0.128 0.765 0.446

Model R2 = 0.204; Adjusted = 0.170 F = 6.009 0.000

D. Job satisfaction (Supervision)

Intercept 1.844 3.884 0.000

Top management support 0.206 1.810 0.073

Benevolent ethical climate (dummy) 0.271 2.514 0.013

Principled ethical climate (dummy) 0.055 0.553 0.581

Ethical behavior and career success 0.373 2.860 0.005

Moral Awareness -0.247 -1.304 0.195

Model R2 = 0.176; Adjusted = 0.141 F = 4.990 0.000

E. Job satisfaction (Work)

Intercept 2.367 5.229 0.000

Top management support 0.054 0.499 0.619

Benevolent ethical climate (dummy) 0.051 0.499 0.619

Principled ethical climate (dummy) 0.097 1.030 0.305

Ethical behavior and career success 0.423 3.409 0.001

Moral Awareness -0.365 -2.019 0.046

Model R2 = 0.111; Adjusted = 0.073 F = 2.929 0.016

F. Job satisfaction (Overall)

Intercept 1.474 5.278 0.000

Top management support 0.138 2.059 0.042

Benevolent ethical climate (dummy) 0.090 1.417 0.159

Principled ethical climate (dummy) 0.049 0.848 0.398

Ethical behavior and career success 0.316 4.120 0.000

Moral Awareness -0.016 -0.141 0.888

Model R2 = 0.244; Adjusted = 0.212 F = 7.545 0.000

* For t-tests of model coefficients, this is the p-value for a one-tailed test since the expected direction

of the alternative hypothesis is known.

55

4.4 Summary of Research Results

This chapter outlined the first part of data analysis and findings. Four research

hypotheses were tested. From the survey, the hypotheses resting result is summarized

in table 4.5 below.

Table 4.5 Hypotheses Testing Result

Hypothesis Findings

H1: Top management support for ethical behavior has no

significant effect on job satisfaction

Rejected

H2: Ethical climate in the organization has no significant

effect on job satisfaction

Accepted

H3: The association between ethical behavior and career

success in the organization has no significant effect on job

satisfaction.

Rejected

H4: There is high level of moral awareness among

members of organization with ethical work climate,

however it has no significant effect on job satisfaction.

Accepted

Chapter Summary:

This chapter has summarized all the statistics, analyzed the measures and tests the

hypotheses and presents the research result. Next chapter will wrap up and discuss on

this entire study.

56

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS

Chapter Introduction:

Chapter five aims to summarize and conclude this entire study. This chapter

highlights the implications of findings that would be beneficial for top management to

apply in their organization. It also outlines the suggestions for future research.

5.1 Implications of Findings

Ambrose et al. (2007) mentioned in their study that if the ethical correlates of

job satisfaction can be identified, then managers may be able to find the best ways to

influence the organization’s ethical climate so as to enhance job satisfaction while

maintaining an ethical environment. This study thus far has discussed in depth on the

four measures of organizational ethics and its link to job satisfaction.

The findings of the study are partly consistent with expectations and prior

findings in the ethics literature. Previous study by Koh and Boo (2001) found that

positive relationship exist between the three measures of organizational ethics (top

management support for ethical behavior, the organization’s ethical climate and the

association between ethical behavior and career success) and job satisfaction (with

respect to pay, promotion, co-workers, supervision, work and overall). However the

current findings reveal that only two measures showed significant relationship

between organizational ethics and job satisfaction (namely, top management support

for ethical behavior, and the association between ethical behavior and career success).

There is no significant relationship found between the rest of two organizational

57

ethics measures, which are the organization’s ethical climate and moral awareness in

the organization. The summary of these findings is as per table 5.1 below.

Meanwhile, in a study by Viswesvaran et al. (1998), only one significant

positive correlation is found, that is between perceived top management support and

job satisfaction with supervision. It is interesting to learn that current finding also

rejects the prior study of Joseph and Deshpande (1997) and Mulki et al.(2008) that

ethical climate is significantly associated with job satisfaction. However, current

findings validate the results obtained by Viswesvaran and Deshpande’s (1996) that

the association between ethical behavior and career success is significantly associated

with job satisfaction. Based on the study by Samad (2005), it is possible that cultural

differences such as norms, values or beliefs of a particular group or community in

different geographical areas might have contributed to the variances of findings

reported here.

It is crucial for an organization to realize that favorable organizational ethics is

associated with job satisfaction. It has strong implication on an employee’s job

performance, absenteeism, motivation, stress level etc. Many previous researches

agreed that the success of creating an ethical environment in an organization lies

mainly in the hands of the top management. This study in line with most of the

previous literatures seems to disclose that top management’s support for ethical

behavior and the association between ethical behavior and career success can highly

be influenced by top managers in organizations. Thus, by consciously working on

these variables, top management can enhance job satisfaction and organizational

commitment among employees and in the workplace. For example, leadership

training, with an ethics component, may be necessary to help managers understand or

value the importance of ethics to the success of the organization. That is, if top

58

management wants its employees to have greater job satisfaction, greater

organizational commitment, and greater esprit de corps, it is important to learn to

communicate to them, on a regular basis, the values and norms as well as the rules

and guidelines of the organization.

According to Valentine and Fleischman (2007), their findings contribute to the

ethics literature by indicating that management should consider invigorating the

ethical focus and culture of the organization with ethics codes, training, and Corporate

Social Responsibility activity, which might prompt more positive beliefs about the

firm, as well as the immediate work context and culture. Based on the survey by PR

Newswire (2006), in a healthy culture, an employee should be able to turn to one

another to find help and support for doing the right thing. At the same time,

companies need to be sure employees are turning to informed sources so that the right

decisions are being made, and productivity is not constrained.

Top management should be the role model to support and encourage ethical

behavior among employees and reward them for doing the right thing. It is noted that

ethical behavior is really driven by how it is encouraged and rewarded. If

organizations are serious about ethics, they must have the elements of an ethics

infrastructure and a real commitment from the leadership on the subject of ethics.

They also need to define ethical behavior in the corporate context and develop a

strategy to reward desired behavior (Mitchell et al., 2005). The key role of top

management is emphasized here; as commitment and support from top management

significantly impact on the effectiveness of any organizational development

intervention. According to Koh and Boo (2001), by promoting and developing a more

benevolent ethical climate, top management can possibly improve job satisfaction and

also enhance organizational commitment among its employees. It is wise to bear in

59

mind that absenteeism and turnover intentions are highly influenced by job

satisfaction and organizational commitment (Elci and Alpkan, 2008).

One of the conventional wisdom of management is that a happy worker is a

productive worker. Employee’s job satisfaction which can be divided into the

affective satisfaction (positive mood and feeling) and cognitive satisfaction (working

conditions and opportunities) is an important variable in organizational settings. It has

been found to influence job attitudes, employee behaviors and organizational

outcomes such as commitment, absenteeism and turnover (Joseph and Deshpande,

1997).

Both absenteeism and turnover are very costly and detrimental to the

organization, because they lead to lower productivity and morale in the organization,

whilst incurring higher costs of hiring, retention and training of new and existing

employees (Koh and Boo, 2001). This result implies that one means for a business to

reduce employee’s turnover and build their job satisfaction is to improve the

employee’s ethical perception. This suggests that the employer’s ethical behavior

significantly affects their satisfaction with their jobs and their likelihood of staying in

their positions (Pettijohn et al., 2007). This study’s findings also suggest that top

management can enhance organizational commitment by giving support such as by

developing and enforcing code of ethics for their organization (Koh and Boo, 2001).

Infact, code of ethics was found to be the most effective measure for encouraging

ethical behavior (Clark and Leonard, 1998). However, some literatures dictate that

codes alone could not address many ethical dilemmas, thus it was not sufficient to

promote ethical behavior. It still requires the top management support to create an

ethical work climate in the organization for the codes to be effective (Koh and Boo,

2001).

60

Jaramillo et al. (2006) observed that higher job satisfaction leads to greater job

commitment, which in turn leads to greater levels in performance. Thus, a firm that

has an enhanced level of ethical perceptions should logically find that these

perceptions lead to greater performance. Obviously, higher performance levels in

return translate into greater productivity and profitability for the firm. For example,

Mulki et. al. (2008) mentioned that identifying leadership practices that promote

ethical climate perceptions in the sales environment has ample managerial

implications. This is because it taps into the specific actions that sales leaders can

undertake to help develop an ethical climate where salespeople are happier with their

jobs and willing to put forth the amount of effort needed to achieve a higher

performance.

Thus, positive job attitudes, reflected in higher job satisfaction, are likely to

result in higher job performance (Brown and Peterson, 1993).The positive relationship

between higher job satisfaction and organizational outcome are also supported by

West and Patterson (1998). It is noted that high level of job satisfaction and

organizational commitment are determinants of improving financial performance. In

fact, effective employee management can actually bring in better and faster result that

to emphasis on quality, technology, competitive strategy or research and development

in its influence on the bottom line (Koh and Boo, 2001).

Moreover, a recent study by Hagedoorn et al. (1999) examined the role of job

satisfaction in employees’ reactions to problematic events in the organization.

Generally, employees can react to problematic events via exit (e.g. leaving the

organization), voice (e.g. suggesting solutions), loyalty (e.g. waiting for conditions to

improve), and neglect (e.g. been absent from work). Both voice and loyalty are often

categorized as constructive behaviors while exit and neglect as destructive behaviors.

61

It is found that job satisfactions promotes constructive reactions and suppress

destructive reactions to problematic events. Hagedoorn et al. (1999) also speculated

that organizational justice (which is expected to affect job satisfaction as per this

study) may also be a motivator for constructive behavior and suppressor of destructive

behavior.

The findings of the present study should prove helpful to leaders in

government, business, and institutions of higher education as they manage, train, and

educate today’s diverse workforce. From the above, it can be concluded that

organizational ethics positively affect job satisfaction, and this in turn creates a

domino effect towards employee’s behavior, performance, and organizational

outcomes. And most importantly, it’s crucial to note that the key role of top

management in promoting ethics in the organization is paramount.

Table 5.1 Summary of Research Results for “The Relationship between

Organizational Ethics and Job Satisfaction: A Study of Managers in

Malaysia”

Hypothesis Findings

H1: Top management support for ethical behavior has no

significant effect on job satisfaction

Not Supported

H2: Ethical climate in the organization has no significant

effect on job satisfaction

Supported

H3: The association between ethical behavior and career

success in the organization has no significant effect on job

satisfaction.

Not Supported

H4: There is high level of moral awareness among

members of organization with ethical work climate,

however it has no significant effect on job satisfaction.

Supported

62

5.2 Conclusions of the Study

As mentioned earlier in this study, majority of the previous research in this

area were carried out in western settings. This is the first study that emphasized on

issues relating to organizational ethics and job satisfaction in Malaysia. This study

revealed that western management and organizational theories might not be valid in a

non-western setting and the findings found in a society might not be evident in a

different society. The overall objective of this study was to explore the relationship

between four measures of organizational ethics and job satisfaction perceived by

managers in Malaysia. In particular, it investigates whether a higher level of job

satisfaction is associated the higher level of top management support for ethical

behavior, a more favorable ethical climate in the organization, a stronger association

between ethical behavior and career success and moral awareness. In order to get

accurate responses, a total of 200 questionnaire survey was distributed, which yielded

123 usable responses (a response rate of 62%). The results of the data analyses in this

study suggest that the most significant variables that contribute towards job

satisfaction are the two measures of organizational ethics (namely, top management

support for ethical behavior, and the association between ethical behavior and career

success). However, it is found that there is no relationship found between the rest of

two organizational ethics, which are the organization’s ethical climate, and moral

awareness.

Table 5.1 summarizes the hypotheses result, and this finding implies that top

management support is one of the means through which corporate leaders can

generate favorable business outcomes. Top management whom acts as a role model

should exhibit an ethical behavior and support ethical climate in the organization to

encourage the rest of the employees to act in the same manner.

63

More importantly, top managers have to be aware that enhanced job

satisfaction can lead to higher organizational commitment, lower absenteeism and

turnover, higher profitability and productivity, and more favorable job

attitudes/behaviors. It also highlights the importance of continued research in this

area.

Else than the 3 variables above that had been mentioned in previous studies,

moral awareness was added as an additional variable. The relationship between moral

awareness and job satisfaction has not been well-researched, and so this study and

findings were exploratory in nature. It was found that moral awareness has that no

significant effect on job satisfaction. It is postulated that this may be connected to

other researchers’ findings that there may possibly be a connection between ethical

work climate and various constructs resembling moral awareness (Cohen, 1995;

Cullen et al., 1989; Victor and Cullen, 1987; Wimbush and Shepard, 1994; Wyld and

Jones, 1997). Since ethical climate was found not to affect job satisfaction in this

study’s sample, hence it is possible that moral awareness will, similarly, have no

effect in the research model. This could be a point for further research work to further

explore the consequents and effects of moral awareness on organizational outcomes

other than job satisfaction (e.g. performance, absenteeism, turnover, commitment,

etc.)

In summary, this paper reports on an exploratory investigation of the

relationship between organizational ethics and job satisfaction based on managers in

Malaysia. The findings enhance the understanding of the organizational ethics and

employee’s job satisfaction. The study objectives have been met and the research

questions are answered. Table 5.2 summarizes the research questions and findings.

64

This research has also provided a better understanding of the relationship

between the 4 factors in order to enhance managerial effectiveness and organizational

success. The findings stress the need of organizational ethics, especially of top

management support to evolve better management practices so that employees'

satisfaction is maintained at a high level. In other words, the findings could prescribe

potential practical implications for managers and consultants in management

development programmes consistent with the training needs of the employees in the

organization.

When ethical difficulties prevail in the working environment, both individuals

and organizations must cooperate to ensure that ethics not only appears on the

business agenda but is openly discussed. Top management is responsible to raise

awareness and understanding of ethics through training of individuals. Organizations

should create a non-threatening environment for the discussion of ethical problems,

and rewarding these ethical behaviors could possibly encourage employees to go an

extra mile in adopting ethical behavior in their decision making. There is a need for

this to encompass a participative process which is seen to include and to value the

views of the widest range of interest groups. Hence, employees will be likely to

perform better and feel a high level of job satisfaction, and in turn will develop more

commitment towards their organizations. Finally, the higher levels of employee’s

satisfaction in such organizations may give an advantage over other organizations in

attracting and retaining employees in a competitive environment.

65

Table 5.2 Summary of Findings of the Research Questions

Research Questions Findings

1. Does ethical climate affect the employee’s job

satisfaction in organizations in Malaysia?

Achieved

2. Does top management’s support influence the ethical

behavior of it’s employees?

Achieved

3. Does an employee with ethical behavior are more

likely to be successful in his/her career?

Achieved

4. Does employee’s moral awareness influence his/her

job satisfaction?

Achieved

5.3 Recommendation for Future Research

From this study, it can be observed that the independent variable (top

management support for ethical behavior, ethical climate, association between ethical

behavior and career success and moral awareness) were the four components

researched. It is suggested that future research should, however, to go beyond these

four components. For example, job security .Stability and security is vital to everyone

and at all times. Security in terms of job is no exception. Insecurity in job is very

likely to affect job satisfaction, performance, morale and confidence, degree of ethic

stress (e.g. difficult ethical issues, limited respect at work place) and individual

personality.

Likewise, the dependent variable (job satisfaction) researched in this study is

only one of the several outcomes of an organization. Future research can perhaps

66

focus on other outcomes such as organizational commitment, company profit,

employee’s motivation, stress level and others.

As mentioned earlier in the limitation, some of the feedback from respondents

in this study is that the questionnaire did not provide ‘in between answers’ such as

somewhat agree or somewhat disagree. It is proposed that future research

questionnaire should take this into account.

Future research can also look into the multicultural aspect in Malaysia and

how ethnicity and its consequences towards organizational ethics. Further it’s also

useful to study business ethics in different countries and the impact of ethical

behavior from an International perspective.

Chapter Summary:

This chapter summarizes the overall report on an exploratory investigation of

the relationship between organizational ethics and job satisfaction based on managers

in Malaysia. This study endeavors to make both theoretical and practical contribution

to the literature, and it also contains several implications for further research. The

findings stresses the need of organizational ethics, especially of top management

support to evolve better management practices so that employees' satisfaction is

maintained at a high level.

67

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Behavior, with a Focus On Sales Organizations”, The Journal of Personal Selling

& Sales Management,10, 2; pg. 29

76

Appendix 1 - Questionnaire

THE RELATIONSHIP BETWEEN ORGANIZATIONAL ETHICS AND JOB SATISFACTION: A STUDY OF MANAGERS IN MALAYSIA Dear Sir/Madam,

This survey is conducted as part of Research Project, which shall be submitted in part

completion of the Master of Business Administration degree from the University of Malaya.

The general purpose of this study is to understand the relationship between organizational

ethics and job satisfaction among Malaysian managers.

I am therefore inviting you to participate in this survey by filling up the attached

questionnaire. The said questionnaire is constructed in a straightforward manner and easy to

answer, which should take not more than 10 minutes of your valuable time. Please be assured

that all information will be treated with the strictest confidentiality and only the aggregate

data will be analyzed.

Please answer all the questions in the worksheet and return the completed questionnaire to me

by email at: lavanie_18@yahoo.com.

Thank you for your valuable assistance in participating in the survey.

Yours sincerely,

Kalavani D.

Supervised by,

Zul Ramly

Lecturer,

Faculty of Business and Accountancy,

University of Malaya

UNIVERSITY OF MALAYA

The Faculty of Business and Accountancy

Master of Business Administration

1. Job Satisfaction

Please mark “����” in the box that corresponds best to your answer. Strongly

Disagree Disagree Agree

Strongly Agree

My organization pays better than competitors.

My pay is adequate considering the responsibilities I have.

I am underpaid for what I do.

My fringe benefits are generous.

I do not like the basis on which my organization promotes people.

Promotions are infrequent in my organization.

If I do a good job, I am likely to get promoted.

I am satisfied with my rate of advancement.

The people that I work with do not give me enough support.

In my organization, when I ask people to do things, the job gets done.

I enjoy working with the people in my organization.

In my organization, I work with responsible people.

The managers I work for back me up.

The managers I work for are competent.

My supervisors do not listen to me.

Management does not treat me fairly.

My job is interesting.

I feel good about the amount of responsibility in my job.

I would rather be doing another job.

I get little sense of accomplishment from doing my job.

2. Organizational Ethics

Please mark “����” in the box that corresponds best to your answer. Strongly

Disagree Disagree Agree

Strongly Agree

Top management in my organization has clearly conveyed that unethical behavior will not be tolerated.

Top management in my organization should have higher ethical standards than they do now.

If a manager in my organization is discovered to have engaged in unethical behavior that results primarily in personal gain rather than corporate gain, he will be promptly reprimanded.

If a manager in my organization is discovered to have engaged in unethical behavior, he will be promptly reprimanded even if the behavior results primarily in corporate gain.

My organization emphasizes the importance of furthering its interests.

Employees in my organization are not expected to be concerned with the organization's interests all the time.

All decisions and actions in my organization are expected to contribute to the organization's interests.

Work that hurts my organization's interests can be acceptable.

Concern for employees is prevalent in my organization.

My organization does not emphasize employee welfare.

All decisions and actions in my organization are expected to result in what is generally best for everyone.

My organization does not consider the well-being of all employees.

Compliance with organization rules and procedures is very important in my organization.

Employees in my organization are not expected to stick to organization policies strictly.

People who do not follow organization rules and procedures are not viewed favourably in my organization.

Strongly Disagree

Disagree Agree Strongly Agree

Successful managers in my organization are more ethical than unsuccessful managers.

In order to succeed in my organization, it is often necessary to compromise one's ethics.

Successful managers in my organization withhold information that is detrimental to their self-interest.

Successful managers in my organization make rivals look bad in the eyes of important people.

Successful managers in my organization look for a "scape-goat" when they feel they may be associated with failure.

Successful managers in my organization take credit for the ideas and accomplishments of others.

Ethical behavior is important for success in my organization.

In this company, people protect their own interest above other considerations.

There is no room for one’s own personal morals or ethics in this company.

It is expected that each individual is cared for when making decisions here.

The most important concern is the good of all the people in the company.

In this company, people are expected to follow their own personal and moral beliefs.

In this company, people are guided by their own personal ethics.

The most important consideration in this company is each person’s sense of right and wrong.

3. Demographic Information Age:

20 – 24 years 25 – 29 years 30 – 35 years

36 – 39 years 40 – 44 years 45 years and above

Gender:

Female Male

Education level:

Secondary Diploma Degree Post Graduate

Marital status:

Single Married

Current job position:

Administrative/clerical Assistant Manager

Technician Manager/Senior Manager

Executive Other – please specify

Type of your organization:

Private limited Government-linked (GLC)

Government Other – please specify

Please state your organization’s industry (e.g. Manufacturing, Service, Finance, etc.)

Size of your organization:

Less than 50 employees 51 to 199 employees

200 to 499 employees 500 or more employees

How long have you worked in your current organization?

Less than 5 years 5 to 10 years More than 10 years

THANK YOU FOR YOUR PARTICIPATION!