IMPACT: International Journal of Research in

Business Management (IMPACT: IJRBM)

ISSN(P): 2347-4572; ISSN(E): 2321-886X
Vol. 4, Issue 9, Sep 2016, 103-112
Impact Journals

RESEARCH METHODOLOGY OF RELATIONSHIP BETWEEN

ETHICAL WORK CLIMATE AND ORGANISATIONAL EFFECTIVENESS
TAPESH CHANDRA GUPTA1 & MOHD HAMID KHAN2
1

Professor, GJY Chhattisgarh College, Raipur, Chhattisgarh, India

2

Research Scholar, Singhania University, Rajasthan, India

ABSTRACT
Cement companies in Chhattisgarh are studied to establish relationship between ethical work climate and
organisational effectiveness. A sample size of 408 employees was finally taken against 600 responses. ANOVA & F-test
was used.

KEYWORDS: Relationship between Ethical Work, Climate and Organisational Effectiveness

INTRODUCTION
About 600 employees, including Executives and Non-Executives working in both National and Multinational cement
manufacturing companies of Chhattisgarh region were asked to respond on the given scales for measuring their perceptions on
prevailing levels of Ethical Work Climates in their company along with its Organizational Effectiveness state. Finally, responses
from 408 samples qualified to be a part of the final data.

RESEARCH DESIGN
The present research was conducted with a 3 x 2 x 2 factorial design. Levels of Ethical Work Climate, Types of Organisation and,
Job Status were the three independent variables while Organisational Effectiveness was the sole dependent variable of this study using the
three-way ANOVA (analysis of variance) technique. The first dimension Levels of Ethical Work Climates were measured at three levels
of analysis as low; moderate and high. The next independent variable Types of Organizations were studied for National and Multinational
cement manufacturing organizations of Chhattisgarh region. The final independent variable of Job Status pertained to the difference of
Executives and the Non-Executives working in the National and Multinational cement manufacturing organizations of Chhattisgarh region.
The combined effect of these three independent variable [(effect of various levels of Ethical Work Climates in both Types of
Organisations (National and Multinational) at both Job Status (Executives and Non-Executives)] was studied on Organisational
Effectiveness.

TOOLS
Two scales ECS (Ethical Climate Scale) and OES (Organizational Effectiveness Scale) were used for the purpose. The
Ethical Work Climate was defined as the shared perception of members of organisation of what is ethically correct behaviour and
the proper process for handling ethical issues, (Victor and Cullen, 1988).
The first scale ECS, as developed by (Victor and Cullen, 1988) carried 36 items. These Items were outcomes of the nine
theoretical ethical climate types that emerged from a cross tabulation of two dimensions namely ethical criteria (used for
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Tapesh Chandra Gupta & Mohd Hamid Khan

organisational decision-making and locus of analysis (used as a referent in ethical decisions) as shown in Figure 1 below.

Figure 1
These ethical criteria were a result of Kohlbergs (1969) study providing six stages of moral development of individuals which
were further summarised in three major types: namely - Egoism, Benevolence and Principle by (Fritzche & Becker, 1984). These
theories were based on the criteria that people use for moral reasoning i.e. maximising self-interest, maximising joint interest and
adherence to principles respectively. The dimension of Locus of analysis was based on sociological theories by Metron and others
(1957) about roles in social system and types of reference groups that shape the behaviour and attitudes people. Later Kohlberg in (1981)
described how each stage of moral development applied to different levels of social system. The Individual level revealed personal ethics
or self-interested behaviour. The Local level specified ethical reasoning within the organisation. The Cosmopolitan level specified the
social system external to the system in which the individual is embedded as professional association or government.
The items composing the instrument were written to capture the nine ethical climate types described above. Each
of these types represented an a priori class of ethical reasoning in the organization. Victor and Cullen (1987) used the 3x3
matrix of nine the radically possible ethical to further develop an ethical climate assessment instrument ECQ.
In the context of the egoism criterion, the loci of analysis identify the particular self (e.g. individual, company)
in whose interests one is expected to act. At the individual locus of analysis, the egoism criterion is defined as
consideration of the needs and preferences of ones own self (e.g., personal gain, self defense), At the local locus of
analysis, it is defined as consider-actions of the organizations interest (e.g., corporate profit, strategic advantage), finally,
at the cosmopolitan locus of analysis, it is defined as considerations of the larger social or economic systems interest
(e.g., efficiency). (Victor and Cullen, 1987)
In the benevolence criterion, the loci of analysis both identify for organizational members who we are and set
the boundaries for our concerns. This subject-object distinction, and the concomitant obligation for other-regarding,
differentiates the benevolent from the egoistic (Gilligan, 1982, Haan, Aerts, and Cooper, 1985). At the individual locus of
analysis, the benevolence criterion is defined as consideration of other people without reference to organizational
membership (e.g., friendship, reciprocity). At the local locus of analysis, it becomes consideration of the organizational
collective (e.g., esprit de corps, team play). This is in contrast to local egoism, in which a reified organizational construct is
the locus of concern. At the cosmopolitan locus of analysis, benevolence is defined a s consideration of other
constituencies outside the organization (e.g., social responsibility)(Victor and Cullen, 1987)
In the context of the principle criterion, the loci of analysis defined sources of principles expected to be used in
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the organization. At the individual locus of analysis, the principles are self-chosen. That is, one is expected in this climate
to be guided by personal ethics. At the local locus of analysis, the source of principles lies within the organization (e.g.
rules and procedures). At the cosmopolitan locus of analysis, the source of principles is extra organizational (e.g., the legal
system, professional organizations). In the local and cosmopolitan climates one is guided by sources of principles apart
from the individual and, thus, regardless of ones personal ethical preferences. To illustrate further the loci of analysis
dimension, three climate types might be described along the diagonal of Figure 1. In the upper left comer is individual
egoistic reasoning as it might be found among residential real estate brokers or in a telemarketing boiler room where
each persons sales and commissions are relatively independent and organizational commitment is quite low. In this case,
decision-making might be characterized as involving mostly considerations of each persons self-interest. In the centre is
local benevolent reasoning. This climate might exit in a semi autonomous workgroup or in a research lab in which there is
a high need for cooperation and the focus is on jointly produced outcomes. In this case, decision making involves the
comparison of each alternatives impact on each member of the team. (Victor and Cullen, 1987)
The choice of criteria as the basis for operationalizing ethical climate raises the problem of distinguishing between
the form and content of ethical reasoning (Kohlberg, 1984). Form and content are generally conceptualized as independent
(Kohlberg, 1984): since the same values (content) can arise from different forms of ethical reasoning (ethical criteria). For
example, organizational values supporting profitability may be derived from any of the three ethical criteria (i.e. profit is
good for me, profit benefits may friends, making profit is what organizations are supposed to do). (Victor and Cullen,
1987)
To tap the form dimension of ethical reasoning, the ECQ was designed specifically to identify organizational
decision making norms with direct links to supporting forms of ethical reasoning. Thus, although an organizational norm
might be considered only the contents of ethical reasoning. Each question the ECQ contained a direct referent to one of the
ethical reasoning criteria. This operationalization was based on the assumption that what one thinks about the subject
matter of ethical thought. What one supposes it to be about must affect what test for acceptability or coherence is
appropriate to it? (Williams, 1985). The criteria in use (e.g. the best for each person, the rules, the interest of the
organization), and then are observable art facts of the organization ethical reasoning process. (Victor and Cullen, 1987)
Kohlberg (1981) argued that the form of structure of making decisions was independent of the content or the
range of possible outcome values of the decision. The distinction between form and content is necessary since the same
outcome (content) can be derived from different forms of ethical reasoning (and vice versa). To tap the form of ethical
reasoning, the questionnaire was designed specifically to identify organisational decision making norms with direct links to
supporting forms of ethical reasoning. Although an organisational norm might be considered only the content of ethical
reasoning, each question contains a direct referent to one of the ethical reasoning criteria. This operationalisation was
based on Williams (1985) argument that what one thinks about the subject matter of ethical thought, what one supposes it
to be about, must affect what tests for acceptability or coherence (that) are appropriate to it.
Victor and Cullen (1988) then used the 3x3 matrix of nine theoretical climate types that provided shape to the present
ethical climate assessment instrument ECQ carrying 36 items for six forms of Ethical Work Climates namely Caring, Rules,
Law & Code, Instrumental, Independence and Professional. Caring climates looked for each-others well being. Rules based climate
typified strictly following of organisational rules and policies. Law and Code based climates required following codes of profession

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and government regulations. Climate of Independence provided following ones own personal moral beliefs. In the Instrumental
climate, employees were guided by their own self-interests. Finally the Professional climate held characteristics of all above climates
and provided the organizations to have optimal solutions for problems considering the uniqueness of situations.
In the factor analysis, the highest loadings of the individual, local, and cosmopolitan levels of the benevolence
criteria descriptors were on factor Included here were descriptors such as The most important concern here is the good of
at the people in the company and In this company, people look out for each others good., Items from the cosmopolitan
level of the egoistic criteria also loaded on this factor. In victor and Cullens (1987) factor analysis, these items loaded on a
unique factor, and the cosmopolitan level benevolence descriptors loaded on the law and code factor. To distinguish this
empirically derived climate type from the theoretical type described above, this factor was labelled the caring type of
corporate ethical climate, (Victor and Cullen, 1987).
High loading on local principle descriptors characterized factor3 and identified the rules climate. This factor
included items such as It is very important to follow strictly the companys procedures here, Everyone is expected to
stick by the company rules and procedures and Successful people in this company go by the book. (Victor and Cullen,
1987).
Factor 4 involved the local and individual egoism criteria descriptors. Descriptors with high loadings included In
this company, people protect their own interests above all else. In this company, people are Mostly out for themselves.
and people are expected to do anything to further the companys interests, regardless of the consequences. This factor
identified. The emergent the instrumental corporate ethical climate type, (Victor and Cullen, 1987)
High loadings on the Individual level of the principle descriptors described factor 5. This factor included items
such as In this company, people are expected to follow their own personal moral and ethical beliefs, and The most
important thing in this company is each persons own sense of right and wrong. Emergent factor 5 and the associated
climate type were labelled independence, (Victor and Cullen, 1987). The latest inclusion was of 6th factor i.e. Professional
form of work climate that carried the features of all the other types and provided the organizations to have optimal solutions for
problems considering the uniqueness of situations.
Respondents were asked to describe their general work climate on a 6-point Liker-type scale ranging from Completely
False (o), Mostly False (1) Some What False (2), Some What True (3) Mostly True (4) to Completely True (5).
The second scale that is OES was specifically constructed for the present study. Organisational Effectiveness was
defined as a state of Justice and/or Convenience to all stakeholders involved. The study measured Effectiveness in terms
of Productivity, Employee Satisfaction, Flexibility and, Stake-holders Interest. Productivity referred to the movement of
organisation towards its goals (locomotion), usually measured on the basis of standards i.e. companywide records of
performance viz a viz-established work standards. Flexibility was conceptualized as the extent to which the organisation
adjusts to internally induced changes and to adapt to the externally induced changes. Employee Satisfaction was defined as
a perceptual pleasure, or positive emotional state resulting from the appraisal of ones job, or job experiences. Stakeholders interest pertained to securing interests of union, government, distributors, society, shareholders & investors and,
customers.
The Productivity dimension had nine further sub-dimensions as Goal setting process, Participation, Quality control,

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Problem skills, Employee support, Authority system, Information system, Direction, and Communication. The Flexibility
dimension had twelve further sub-dimensions as Decision making, Change Management, Cooperation & Coordination,
Training & Development, Trust, Resource- Utilization, Planning, Conflicts Management, Controlling, Adaptability,
Standardisation, and Risk Management. The Employee Satisfaction dimension based on Hertzbergs (1970) Two Factor
Theory had two major Satisfaction factors as Hygiene and Motivators. The Hygiene factor carried eight further
sub-dimensions as Relations with Supervisor, Company Policy & Administration, Working Conditions, Salary, Security,
Relations with Subordinates, Supervision, and Personal Life. The Motivator factor on the other hand carried six further
sub-dimensions as Recognition, Advancement, Responsibility, Achievement, Work itself, and Growth. Finally the Stakeholders Interest dimension had six sub dimensions as Union, Government, Distributors, Society, Shareholders &
Investors, and Customers.
The respondents were asked to describe their perceptions about their Organisations Effectiveness state on a 5-point
Liker-type scale ranging from Strongly Agree, Agree, Cant Say, Disagree to Strongly Disagree.
For the making of this scale, initially about 800 items were prepared for the various dimensions of Organisational
Effectiveness. After a series of content validity tests by five experts of the relevant field a 135-item scale was used for the
pilot study in both types of organizations as mentioned in the study. The further item-analysis using 2-tailed Independent Ttest could provide elimination of only 23 items despite stringent criterion of 0.01 i.e. (p<0.01) for the highly significant
results. The next stage was then to have factor analysis for the results of pilot test. Using the Principle Component Method the
factor analysis provided the present 54-item scale with these items to be ones having highest factor loadings.

METHODOLOGY
The present study intended to investigate about Organisational Effectiveness by maintaining Ethical Work Climates
in the cement manufacturing organisations of Chhattisgarh region. Using appropriate statistical tables, common reference of
F-ratio was applied to test the significance of differences for verification of various hypotheses. On prima-facie the
assumptions for applying F-test i.e. normalcy and homogeneity of data were tested.
The study further used a three-dimensional (3x2x2) ANOVA technique at SPSS to analyse the data whereby
numerical values were assigned for various independent variables of the study. Levels of Ethical Work Climates (level) were
assigned 1, 2, and 3 for low, moderate and high levels respectively. For the dimension of Types of Organisation (co),
National Company and Multinational Company were assigned codes of 1 and 2 respectively. For the dimension of Job
Status (emp), 1 represented Non-Executives, while 2 represented Executives. Finally, Organisational Effectiveness (oe) was
observed as the dependent variable.
For the further analysis the three main effects of the three independent variables as Level of Ethical Work Climate,
Type Of Company, and Job Status were studied on Organisational Effectiveness. Further, useful and important information
was derived as joint effects of any two and more factors were studied. The greatest advantage of ANOVA (analysis of variance)
technique is that it provides an opportunity to examine the interaction between two or more variables at a time.
It is possible for a treatment to affect one group differentially than it does to another. Also it is possible for the effect of
one treatment to depend on the specific circumstances under which it is administered. When the effect of one treatment depends
on a second treatment, an interaction is obtained. Here, in the three-way analysis of variance, we get three such first-order

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interactions between any two factors, and one second-order interaction among all the three factors.
The three first-order interactions that the present study undertook were the interactions between (1) Level of Ethical
Work Climate and Type of Company (Level X Co); (2) Level of Ethical Work Climate and Job Status (Level X Emp); and (3)
Type of Company and Job Status (Co X Emp). Also the second-order interaction giving the combined the effect of all the three
independent variable (Level of Ethical Work Climate, Type of Company and, Job Status) with the dependent variable
Organisational Effectiveness was also studied.
Although the results of F-test confirmed that together all the independent variablse influenced Organisational
Effectiveness and that organisations having high Ethical Work Climate showed more Effectiveness, it was also to be seen
that among the six different forms of Ethical Work Climates (Caring, Rules, Law & Code, Instrumental, Independence and,
Professional) which one had maximum relative importance for Organisational Effectiveness. Therefore, Regression
analysis was performed for the purpose.

PROCEDURE
Once the scales were constructed, total 600 Executives and Non-Executives working in both National and
Multinaional cement organisations of Chhattisgarh region were asked to respond on the given scales. The two scales were
given to employees (respondents) at the commencement of their working shift (cement manufacturing is a continuous
process therefore the plants operate 24X7 in three shifts of eight hours each in addition to a general day shift for managing
administrative affairs) and were asked to respond by the completion of their shift. However, Executives with their overtly
busy schedules and responsibilities took longer time compared to the Non-Executives to submit their responses. The
collection of responses was then followed by scoring and compilation of data. Finally the SPSS software was used for
application of statistical tools and tables for the purpose of data analysis.

CONCLUSIONS
F-Test is used to establish the relationship.

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